What we can learn about decision fatigue from “hungry” judges

Read Time:4 Minute, 34 Second

Being a good judge requires a certain temperament.

As investors, we can learn a lot from how judges approach their day-to-day duties.

They must be fair and impartial … sober and balanced … and emotionally detached.

But that doesn’t mean they aren’t hungry and irritable like the rest of us!

“Hungry” judges and fatigue from decisions

Back in 2010, Stanford researchers studied judges and their decisions to grant or deny early release to inmates who stood trial. They analyzed more than 1,100 individual decisions made during the year.

In total, judges approved parole appeals in about one-third of the 1,100 cases studied — consistent with known rates. But the researchers found that the time of day was a are significant factor in judges’ decisions.

What it all boils down to is that inmates who appeared in court earlier in the day received more favorable parole decisions. On the contrary, those who appeared before lunch were more frequent refused parole.

After lunch, the number of paroles jumped again to the more favorable level of the morning. But in the afternoon, the number of paroles fell again, reaching a low for the rest of the day.

Here’s a diagram – dotted lines indicate power breaks:

Now, if judges were automatons – independent of hunger, fatigue or mood – this chart would not exist. Instead, you’ll see one consistent rate of favorable parole decisions regardless of the time of day.

But judges are not robots. There are judges people.

Although judges are smart, well-intentioned and ethical, they still get tired, hungry (even “hungry”) and moody, like all of us. These subtle fatigue factors greatly influence the decisions they make.

There’s even a term for it: decision fatigue. It is an observation that people tend to make much worse decisions the more decisions they have to make.

Decision fatigue affects everyone. It corrupts the decisions we face in every aspect of our daily lives, from what to cook for dinner to what to do with our investments.

Am I spending or saving? Stocks or bonds? Buy and hold or buy and dump? Growth or value? Google or Amazon?

As an investor, every decision you make can make a big difference to your investment portfolio and your family’s financial goals. And you’ll face decision fatigue at every turn.

Remember, even judge not ideal. So don’t rely on it!

But I have a simple solution for you: To avoid decision fatigue, you should reduce the number of decisions you make to a manageable number.

I that is to say where systematic investment strategies get into the game.

How to overcome decision fatigue when investing

Systematic, or “rules-based,” investment strategies minimize your role in the day-to-day decision-making process, thereby minimizing the number of opportunities you have to make an inferior decision.

I didn’t even know that decision fatigue was a thing until I heard this story myself about “sassy” judges a few years ago.

But I understand.

Although I try to be calm and analytical, I am human. I get as tired of making a decision as the next guy!

My evolution as a trader has been one big attempt to minimize decision fatigue. After leaving the Fortune 500 financial planning firm where I worked throughout the 2008 financial crisis, I took a job at my own hedge fund trading currencies.

It was no a buy and hold firm. We actively traded in the most volatile markets of the world. We went long and short — and made a lot of money from it.

I did well there, regularly earning “top trader” status. But the problem was that I still didn’t have full confidence in the strategies I was using.


Because I didn’t have my own systems nailed again.

I made buy and sell decisions based on the news of the day and my subjective interpretations of how the market would react to that news. Basically, I made decisions based on intuition. And it made me more uncomfortable because I continued to work there.

So my next move was to a firm that focused on systematic investing. I worked as a client advisor for rule-based or systematic investors and learned what systematic investing is all about.

It comes down to two simple principles:

  1. Systematic investing ensures you make decisions based on objective, real-world data, rather than the vagaries of the market and your gut feeling on any given day.
  2. A systematic approach ensures that your investment decisions are driven only by the variables that really matter, rather than the meaningless “noise” that bombards most investors every day.

You see, the purpose of systematic investing isn’t just to feel less stressed when making decisions. It’s to make money … as much as you can … without second guessing or overreacting to the market in a way that loses you money on an ongoing basis.

In short, systematic investing is everything earn more money with less stress!

This gets to the heart of what I do in each of my premium stock services.

As an example: After several weeks of research, I use my systems to find the recommendation for myself with the highest conviction Fortunes Green Zone subscribers every month.

These stocks belong to mega-trends with staying power, such as genomics, artificial intelligence and renewable energy.

To join me in reducing the number of decisions you need to make, click here to learn more.

To good profits,

Adam O’Dell

Chief Investment Strategist

Source by [author_name]

0 %
0 %
0 %
0 %
0 %
0 %
Previous post The Sacramento natives are competing in the World Series
Next post Ending Zombie Projects: How Value Stream Management Can Help