Denise Shull on Emotions as a Dataset and Avoiding Investment Mistakes [Replay]
Aug 18, 2023
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Denise Shull, Founder and CEO of ReThink, uses neuroscience and modern psychoanalysis to help clients succeed in investing and trading. In this podcast, she discusses the impact of emotions on decision-making, the challenges of trading and investing, perception and judgment in markets, the importance of culture and sleep in hedge fund success, and the cultural acceptance of anger. She also shares insights on staying organized with productivity systems.
Understanding and predicting emotions is crucial for successful decision making in financial markets.
Unconscious biases and past experiences heavily influence perception and judgment in trading.
Traders should trust their intuition and emotions, as they provide valuable information for making better judgments in the markets.
Deep dives
The Importance of Predicting Emotion in Decision Making
In this episode, Denise Schull, founder and CEO of Rethink, discusses the significance of predicting emotions in decision making, particularly in the context of the financial markets. She emphasizes that successful traders often possess strong social skills and an ability to predict how others will react to market conditions. Schull highlights the importance of being self-aware and in tune with one's own emotions and bodily sensations, as they can provide valuable insights into decision making. By understanding the unconscious emotional drivers behind their actions, traders can become more effective in managing risk and achieving success in the markets.
The Influence of Past Experiences on Perception and Judgment
Denise Schull explores the impact of past experiences on perception and judgment in the financial markets. She explains that individuals' self-image and expectations play a crucial role in how they perceive and interpret market events. Schull encourages traders to become aware of their unconscious biases and defense mechanisms that may hinder their decision-making process. By uncovering the emotional narratives and patterns from the past, traders can gain a better understanding of their behavior and make more informed decisions in the markets.
The Role of Intuition and Conviction in Market Decision Making
Denise Schull emphasizes the importance of intuition and conviction in market decision making. She highlights that intuition and bodily sensations provide valuable information that can guide traders in making better judgments. Schull advises traders to trust their instincts and cultivate a deeper understanding of their emotions and confidence levels. By recognizing the role of fear, regret, and other unconscious emotions, traders can navigate the markets more effectively and improve their overall performance.
The Importance of Understanding Emotional Decision-Making
Emotion plays a crucial role in rational decision-making, according to the latest neuroscience. Contrary to popular belief, emotions are not obstacles to rationality but are necessary for complete analysis. Decisions are ultimately based on our confidence in our analysis, and it is the feeling of that confidence that guides our actions. Emotions provide valuable information and can be seen as a data set that can be analyzed and understood. By developing a vocabulary for our feelings and emotions, we can accurately answer the question of 'what am I feeling and why?' This understanding of emotions and their role in decision-making is essential for better market perception and judgment.
Prioritizing Physical Health and Building a Psychological Capital
Creating the right culture in a hedge fund is crucial for optimal performance. One important aspect is prioritizing the physical health of employees. Sleep deprivation can impair judgment and perception of risk, so ensuring that employees have sufficient rest is crucial. Building a vocabulary for emotions and using tools like conviction spectrums can help individuals accurately understand what they are feeling and why. By untangling their emotions and separating incidental intuitions from true pattern recognition, individuals can make better decisions. Moreover, creating space for the voices of intuition in the decision-making process and analyzing them allows for improved accuracy. Building psychological capital and focusing on the psychological well-being of employees can lead to a more productive and successful hedge fund.
Denise Shull is the Founder and CEO of ReThink. In that role, she uses neuroscience and modern psychoanalysis to help clients become successful in investing, trading, and leading teams. She has consulted on the development of Showtime’s BILLIONS, coached Olympic champions, and often appears on CNBC, Bloomberg and in the Wall Street Journal. Before ReThink, Denise worked in finance. She started at one of the first electronic trading firms in Chicago, then traded at Schonfeld Securities before she ran her own desk at Sharpe Capital. Denise holds a Master of Arts from the University of Chicago. Her thesis was cited in 2013 as one of the first papers written about neuropsychoanalysis. In this podcast we discuss why understanding perception, judgment and decision making matters, how your unconscious affects your decision making, the particular challenge of trading and investing in markets, and much more.