The assumptions about what the market wants have been given far to much room during the 30 years leading potentially good companies astray – away from investments and into the swamp of short-term profits.
The board of directors of Credit Suisse were smart when they recruited Mr Tidjane Thiam from the insurance industry.
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William Shakespeare was clearly a great thinker and I do not think he would have allowed Hamlet to ramble on, almost boring Ophelia to death, about giving up riches through suicide if there was not a deep meaning imbedded in the mystical statements. It is obvious that Be refers to “behavioural economics” and Hamlet was considering leaving traditional finance for a socially connected economic science. The man had a lot on his mind.
We have struggled ever since. Daniel Kahneman is a master at putting into words what many people before him have felt but have feared to say; we are not very rational – in fact we are controlled by intuitive responses in turn controlled by emotions.
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People in finance like to flatter themselves by trying to keep equity markets in a black box, dressing in pinstriped suits and throwing financial terminology around them. So are financial decisions in capital markets complex? Should we consult experts to make clever investments?
The truth is that there are many people who’s job is to understand capital markets but as the markets are truly chaotic, they have the same chance to perform their job well as a ice cube can survive in hell. We just do not know what will happen in the next few months as we do not know what people are up to: some people sell and some people buy, for various striped reasons.
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…and afterwards our companies shape us.
This is a warped quote from Winston Churchill and from a speech the Prime minister made in the House of Comons. In the event, Churchill mentioned buildings and how we in the end are shaped by the quality of the buildings we occupy. The same goes for companies.
The entrepreneur shapes the company and when it reaches a certain size, the company and its culture shape its employees. The Nobel price winner Dr Daniel Kahneman compared our two mental forces, system 1 being the intuitive response, to system 2, our logical reasoning, and suggested that system 1 is 200 000 times more powerful.
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