38 THE INVESTOR
and were seated in separate rooms. In one room, the number 1435
was displayed on the blackboard. In the second room, the number
1100 was displayed. These numbers were never mentioned by the
researchers. Rather, the participants were given a series of ques-
tions to answer, including the Magna Carta date. As you can prob-
ably guess, the participants in the room with the higher number on
the blackboard had a significantly higher average answer than the
group with the 1100 figure on the board. Without even being
conscious of these numbers, the people in each room were influ-
enced by them. Similarly, the amount of television we watch influ-
ences our perception of reality. People who watch lots of TV re-
port that the world is much more dangerous than those who don’t
watch much TV.
An exercise for extraverts is to keep track of how much time
they spend out in the world researching investment ideas versus
the amount of time spent alone thinking and researching stocks.
The balance between the inner and outer world is important to
successful investing. The single biggest tool that we all possess to
maintain the balance is awareness—simply paying attention. If
we know our natural tendency and consciously work to balance it,
we will be more likely to win in the markets. Do you know how
much time you spend trying products and talking to people versus
reading and thinking? Try keeping a diary for a week and check
the ratio.
When I was an analyst following retail stocks in the late 1980s,
one of the hottest names was The Limited. Everything they did
seemed to work. Management was cocky. Growth was outrageous.
Of course, the P/E ratio climbed to nearly twice the market level.
Reading the reports and running the numbers, I could not find a
way to make The Limited a buy recommendation. It was too ex-
pensive, based on my assumption that their “hot” streak would
cool off in several years. We passed on the stock and thereby missed
one of the biggest success stories of the decade. Moral: A wise man
leaves the office and follows his kids around the mall.05 ware 38 1/19/01, 1:06 PM