The first success guideline for wealth is being able to think most efficiently and the best-selling book, “Blink” is a worthwhile read because it offers an important idea on how to think, learn and process information.

The author, Malcolm Gladwell, unveils an innovative thought procedure he calls, Thin Slicing.  Thins Slicing can be an important success guideline because it can help you invest and do business faster and more accurately. Thin slicing is the ability to make fast decisions based on small amounts of the most important information on any subject.

Success Guidelines in the Information Era

Blink points out that in the Information Era too much information can be bad. Our greatest intelligence can be overwhelmed by data. We make mistakes when we ignore our first thoughts and hunches. Excessive thinking reduces success.

Success Guidelines at the Museum

The book begins by showing how the Getty Museum was offered a Kouros statue of unbelievable quality for nearly $10 million. The museum was suspicious and hired experts who ran every extensive test imaginable for 14 months before finally deciding that this statue was real. They bought the Kouros but upon revealing it to an art expert, the first thought that popped into her mind was the word “fresh”.  Upon this and several other art experts’ first impressions the statue was reexamined and its authenticity shaken!

success guidelines for wealth

Photo of the Kouros at the Getty Museum

Success Guidelines for First Impressions

Thin Slicing is the process of relying on our accurate first impressions similar to the one these art experts had. This is not instinct and is not intuition. This is a focus on finding the priority data about any one situation that really counts and then forming conclusions from that data. Thin slicing ignores huge amounts of information that may seem important but often may be just noise and static that doesn’t matter.

Success Guidelines for Spotting Patterns

Blink shows that this ability to spot patterns and behavior based on very narrow slices of experience is often unconscious. We can come to highly accurate conclusions in very brief amounts of time, but can then mess up the right answer if we try to think through why we made the decision.

However the books shows that through observation we can learn that patterns our unconscious sees and use the knowledge to greatly improve the accuracy (and speed) of our decision making process.

Success Guidelines in Insurance

For example, the book shows how an insurance company that offers medical malpractice has learned to ignore exhaustive, expensive examinations of doctor training, credentials and history of medical errors. Instead the firm’s staff just listens to very brief snippets of conversation between a doctor and his or her patients. The company has learned that a doctor’s skill and the number of errors he might make has little to do with litigation. How a doctor treats his patients is what determines whether there are lawsuits or not.

This insurance company has “thin sliced” its information processing. The company focuses on personality and social skills rather than on medicine and has identified a few common traits that make the difference between doctors who get sued and those who do not. The safe doctors for example spend three and a half minutes more per session with their patients (18.5 minutes versus 15 for doctors who were sued). They let their patients know what they are doing and why, engage in active listening and put more humor and laughter into their exams. The quality of data given by the sued and not sued doctors is the same. The difference is simply in how the data is delivered!

Success Guidelines in Marriage

In another instance a marriage psychologist is able to predict with 90% accuracy whether a couple will remain married over the next 15 years after reviewing a 15 minute video of the couple talking. If he reviews an hour- long conversation his accuracy rises to 95%.  He does not need to look at their history, hear their problems, analyze, or even talk with the couple. He has created a coding system for their emotions and reactions in the conversation (disgust, contempt, anger, defensiveness, stonewalling, etc.) and he assigns a code to every second of the conversation.

Findings have shown that almost anyone can be trained to be highly accurate in predicting whether a marriage will succeed or not after observing just three minutes of conversation.

Success Guidelines in Investing

What does this have to do with investing? Blink is important because when it comes to investing there is always way to much date of which most is useless.

There are so many variables that can affect the value of a piece of land, bond or share, that the best we can do is collect lots of data about the past and then plunge ahead with hope and a prayer that the future will be the same. (And of course, it never is!)

A very few investors consistently do better than most.

Yet when these best investors try to describe how or why they are better, they cannot accurately do so.

Blink quotes the son of George Soros for example who said: “My father will sit down and give you theories to explain why he does this or that but I remember seeing it as a kid and thinking at least half of that is bull. I mean you know the reason he changes his position on the market or whatever is because his back starts killing him.”

We know more than we know we know. All we have to do is learn how to identify this knowledge and then systematically tap into it.  Learning this process saves huge amounts of time, drastically enhances accuracy and brings us great power.

Next let’s look at how Michael Keppler has used Thin Slicing to be one of the best equity analysts in the world. Learn more about Keppler.

blink

Learn more about Blink.

Go to the next lesson Success Guidelines for Investing

Success Guidelines for Wealth – June 19, 2005.