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He’s a has-been

This article originally published in The Northern Daily Leader on 18 August 2012.

One of the most interesting forms of human behaviour is trusting your instinct or intuition in the decision-making process. We all know what it means to make decisions using our gut feeling, but it’s hard to describe how it feels and where that feeling comes from. It doesn’t seem logical to say “I’ve got a feeling in my gut that we can trust this person”, but it’s something that most of us have probably felt or said at some stage during our lives.

It’s also true however that gut feeling can be proven to be completely wrong. I’m always reminded of this when I recall a rugby test match from many years ago. Australia was playing New Zealand in the Bledisloe Cup and I was watching with a group of friends in a pub in London. During the warm-up the commentators kept talking about Joe Roff (I told you it was a while ago) and his form for the Wallabies. Feeling I knew better, I loudly proclaimed to all within earshot that Roff had no place in the Australian team, that he was nothing but a has-been and had been picked solely on reputation. Of course you won’t be surprised at what happened next during the game: there’s Has-Been scoring a try; there’s Has-Been making a try-saving tackle; look there’s Has-Been scoring another try and knocking over the conversion; oh and there’s Has-Been being awarded the man of the match award. All of this was gleefully and loudly pointed out to me by my friends during the game, an embarrassing reminder of my gut-call that Joe was past his prime.

I was reminded of my foolishness in doubting Joe Roff when I read some interesting research which stated that 32% of investors relied on their gut feeling when making investments. Rather than asking a professional for advice, doing some research or even talking to a friend or family member, more than a third of us prefer to invest on the basis of our gut feeling. That’s not to say that hunches, intuition or gut-feeling have no place in investing, it’s just that your gut-feeling should only form the basis for further research. If your gut says yes, that’s the signal to do some deeper investigation which hopefully confirms your intuition. For example, a little bit of research would have told me that Joe Roff was practically born and bred here in Northern New South Wales, and how could you ever doubt somebody with that pedigree!