Last week, I finished reading Blink by Malcolm Gladwell. It’s not really about personal finance; it’s about the accuracy of certain snap decisions. I read the book with the intent of relating its message to the topics I focus on here.
Blink: The Power of Thinking Without Thinking describes how some people have the ability to make accurate judgments in a split-second. In some cases these judgments are more accurate than those following a systematic, scientific review of the situation. The main thing to take away from the book is those people who are experts in their field can often make better decisions subconsciously in the first two seconds of an event than what their conscious mind can handle.
Gladwell’s stories involved very little that most people could gain. Only years of experience can prime the subconscious for “thin-slicing,” and this point is often hidden in the book.
There was nothing I could learn from this book that could be applied as advice or thoughts for the typical investor. This is a book about experts. This is a book about Warren Buffetts — the author mentions the Oracle of Omaha to bridge the phenomenon to theories of investing at one point, but it doesn’t have anything that you or I could take away without years of intimacy with a subject.
What if you do have intimate knowledge of investing? What kind of snap judgments could be made? Whether a company is a good candidate for a buy? I think it would have to be something more specific. You could take a look at an annual financial report and know whether a company is in good shape or is hiding something. You could watch the CEO on Bloomberg TV or CNBC and know whether he or she has confidence in the company. That’s about as far as I see this going.
If you’ve read the book, feel free to share your thoughts on whether there is anything within that could be applied to personal finance.
Updated July 16, 2010 and originally published January 30, 2006.