I’m Tired of Making Decisions! So Here’s What I’ve Done About It
I’ve always struggled with making decisions. It just doesn’t come naturally to me.
I blame it on my mother, who was loving and good-intentioned, but a little heavy-handed in the parental decision-making department.
My brothers and I never heard anything like, “What do you feel like for dinner tonight?”
Everything was always already decided for us: “Tonight’s spaghetti. Could you set the table for me?”
Needless to say, when I was grown and on my own, I had to figure out how to make decisions. All kinds of decisions… from insignificant and routine ones, like what’s for dinner, to important and infrequent ones, like what kind of career to pursue.
As I’ve struggled with figuring out how to make good decisions, I’ve learned a lot about myself.
I’ve learned I’m a “slow” and “deep” thinker.
I need time to “marinate” on important decisions, and consider more angles than most people. But when I do finally come to a decision, I tend to be 100% confident and committed to it. And I think, on balance, those are generally good attributes of a successful decision-maker.
But I also know my limitations.
I’m still not very good at making on-the-spot decisions. I have trouble with rapid successions of decisions. And if I’m even slightly hungry… forget about it! I’m toast! (My wife jokes that, when I’m hungry, I’d be better off eating my own hand than deciding between two, equally fine lunch options.)
I divulge all of this today not only to poke fun at myself, but to open up a candid discussion about decision fatigue.
The more I learn about decision fatigue, the more I’m convinced that it’s one of the primary reasons why most investors struggle to meet their financial goals – whether they realize it or not.
And I’m also convinced that systematic (“rules-based”) investment strategies – like 10x Profits – are the perfect solution to the damaging effects of decision fatigue.
But before I make my case for systematic strategies, let me show you proof that decision fatigue is real (and harmful)…
The most popular story used to explain decision fatigue is about hungry judges.
In 2010, Stanford researchers studied judges and their decisions to either grant or deny parole to prisoners coming before the court. They analyzed over 1,100 individual decisions, made throughout the course of a year.
In total, judges approved parole appeals in about one-third of the 1,100 cases studied – in line with known proportions. But the researchers discovered that time of day was a significant factor in judges’ decisions.
Essentially, prisoners who appeared before the court early in the day tended to get more favorable parole decisions, while those appearing just before lunch were more often than not denied parole.
Then, after lunch, the number of paroles granted jumped back up to the early-morning levels. But then throughout the afternoon, the rate of paroles granted trended down, hitting a low by the end of the day.
Here’s the chart (with the dotted line indicating food breaks)…
Now, if judges were robots – unaffected by hunger, fatigue, or mood – this chart would not exist. Instead, you’d see one steady rate of favorable parole decisions, regardless the time of day.
But judges aren’t robots. Judges are people.
And even though judges are generally smart, well-intentioned and ethical people… they still get tired, hungry, and moody, like the rest of us. And, clearly, those subtle “fatigue” factors have a dramatic impact on the decisions they make.
In the simplest terms, decision fatigue is the observation that people tend to make worse decisions the more decisions they make.
Our first 20 decisions of the day are rational… our next 20 decisions are a little less so… and our last few decisions of the day can be downright reckless (ice cream and re-runs, anyone!?).
But let’s turn this discussion on decision fatigue to how it affects investors.
The Case for Systematic Investing
The decisions you must make about your money are endless.
Do I spend or save?
Cash or T-bills?
Stocks or bonds?
Passive or active?
Diversified or concentrated?
Growth or value?
Complicated or simple?
Google or Amazon?
Sell (for a loss) or hold?
Sell (for a profit) or hold?
You get the idea…
As an investor, every decision you make can be hugely consequential to your investment portfolio and to your family’s financial goals. And the decisions you’re faced with are endless.
If decision fatigue leads you to eat ice cream in bed at midnight, it’s your #1 enemy as an investor.
But there are “tools” you can use to combat it.
To avoid the downside of decision fatigue… you’ve got to avoid decisions. Or, at least, you’ve got to greatly minimize the number of decisions you have to make on a daily, weekly, and monthly basis.
And that’s where systematic investment strategies come into play.
Systematic, or “rules-based,” investment strategies minimize your role in the decision-making process. Therefore, they minimize the number of opportunities you have to make a foolish decision, caused by decision fatigue.
I didn’t always appreciate this benefit of systematic strategies.
When I was cutting my teeth in the investment business, I traded foreign currencies for a prop firm. I traded on a purely “discretionary” basis, which meant I was faced with decisions every minute of every day…
Do I sell now? No.
How about now? OK.
Now what should I buy? The pound? The euro? Should I hold it through the weekend? Should I get flat before GDP numbers are released?
The decisions were endless… and I hated it. Remember, I’ve admitted to having trouble making a long string of quick decisions. And that’s precisely what discretionary traders do.
Eventually, though, I found my tendency for deep thinking, deliberate decision-making, and discipline were perfect attributes of a systematic investor.
I learned that once I develop and test my strategies, like the 10X Switch – which requires deep thinking and careful decisions – all I have to do is sit back and run the strategy.
I don’t have to make decisions all day long… I don’t have to face the same decision – “Do I buy? Do I sell? Do I hold?” – each and every day. I don’t have to second-guess myself.
The 10X Switch tells me exactly what to do and when to do it (risk-on or risk-off) to transform $10k into as much as $100,000 in five years.
And as I said in an earlier note to you, my extensive historical testing of this incredibly easy two-step strategy showed it could make money 100% of the time… and CRUSHED the S&P 25-to-1 between 2005 and 2010!
Truly, committing to systematic investing is one of the best things I’ve ever done for myself. It’s taken the monkey of continual decision-making off my back – and with that, I’ve seen dramatic improvements in both my wealth and health.
And it’s my sincere hope that you, too, will benefit from systematic investing. That’s really what 10X Profits is all about – implementing a “rules-based” strategy, with discipline, and avoiding the pitfalls of decision fatigue, cognitive biases, and our tendency to make “irrational” decisions with money.
It’s certainly helped my beta testers over the past several months…
Greg A. wrote in to let me know this:
I have been with 10X Profits from the start and have traded each time as recommended by the system.
I am enjoying the simplicity of the trades. Thank you for all the research you do to help us to improve our odds in these crazy markets.
And Chris C. emailed me with this note:
I have been in every trade since joining in January. I love the simplicity of this. Before 10X Profits I wanted to trade volatility because it seemed simple. But it is not. I lost a little playing the VIX and stopped. Now you are doing all the work for me.
I have only bought and sold your signals, so I am now making money trading volatility!
Chris is exactly right, the concept of volatility is simple, but finding the right time to flip the switch is not. That’s exactly why I created 10X Profits.
To make it simple to invest.
To take away the need for any decision making.
To help you become an investing machine!
Tune in on Monday, July 17 at 1 p.m. EDT for my special online event, The Switch That Could Make You Rich: How One Simple Move Could Hand You 10X Profits in 5 Years or Less.
See you then!