Source: Red and Green As centralized investors, our goal is to have a greater understanding of our companies than any Wall Street investor. If we are willing to work hard and learn as much as possible about our companies, we are likely to know more than general investors, which is all we need to gain a competitive advantage. On the product structure side, the operating income of products worth 10-30 billion yuan is 401/1288/60 million yuan, respectively, in 2023, the overall sales volume of the company reached 18,000 kiloliters, a year-on-year increase of 28.10%, showing significant growth.

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People who have an excessively high self-view are everywhere. This misjudgment also applies to people's primary "personal possessions". People tend to excessively praise their spouses. People usually do not objectively evaluate their children and instead give high praise. Even people's small personal items generally receive excessive compliments. Once people own an item, their value assessment of that item tends to be higher than before they possessed it. This phenomenon of overestimating one's personal possessions has a name in psychology: the "endowment effect". After making a decision, people tend to believe that their decision is good, even better than they thought before making that decision.

The tendency for excessive self-view often leads people to prefer those who are similar to themselves. Some psychology professors have conducted a fun experiment called "dropped wallet" to prove this effect. All of their experiments have shown that if the person who picks up a wallet discovers that the owner is very similar to themselves based on the identity clues in the wallet, then the likelihood of them returning the wallet to the owner is the highest. Due to this psychological characteristic of humans, factions formed by similar people always play a significant role in human culture, even after we wisely attempt to eliminate their worst effects.

And this hurdle is the highest. It not only requires rich practical investment experience, deep understanding of trading systems and markets, but also the individual's personality, values, and understanding of the world to reach a realm where they can control and adhere to the trading system. They must regard the trading system as part of their lifestyle, integrate it into their thoughts and souls, and merge with the trading system to achieve the effect of passive investment. I think that's just about it.

In modern life, there are some very bad factions controlled by a group of people with excessive self-view, who only select new members from those who are very similar to them. This could lead to some very bad outcomes in modern life.

Therefore, if the academic level of the English department at a prestigious university deteriorates significantly, or if a brokerage firm's sales department develops a habit of frequent fraud, these problems will have an increasingly bad natural tendency, and this tendency is difficult to reverse.

This situation also exists in corrupt police departments, prison guards, or political groups, as well as in countless other places filled with bad and stupid things. For example, some large cities in the usa have terrible teachers' unions that are willing to harm our children, protecting low-performing teachers who should have been fired. Therefore, the most useful members of our civilized society are those responsible individuals who are willing to "clean house" when they find problems within the institutions they manage.

Naturally, all forms of excessive self-esteem can lead to mistakes. How could they not?

Let us take the example of some foolish gambling bets. When buying lottery tickets, if the numbers are randomly assigned, the bets placed will be fewer, while if the numbers are chosen by the players themselves, the bets placed will be more. This is highly irrational. The chances of winning with these two number selection methods are almost exactly the same, with players having very slim chances of winning. Modern individuals wouldn't normally buy so many lottery tickets, but state lottery organizations exploit people's irrational preference for choosing their own numbers, causing them to foolishly buy more tickets each time.

The "endowment effect" of excessively praising one's own personal belongings reinforces people's fondness for their own conclusions. You will find that someone who has already purchased pork futures on a commodity exchange now foolishly believes, even more strongly than before, that his speculative behavior has many advantages.

Some people love sports, thinking that they have a deep understanding of the relative strengths between different teams, and they foolishly go to buy sports lottery tickets. Compared to horse racing gambling, sports betting is more addictive - partly because people automatically overvalue the complex conclusions they come to.

In skill-based competitions - such as golf tournaments or poker card games - people always foolishly choose opponents who are clearly much better than themselves, which can lead to extreme and unintended consequences. The tendency towards overestimating oneself reduces the accuracy of these gamblers when evaluating their relative abilities.

However, what is more detrimental is that people often overestimate the quality of the services they will provide to companies in the future. Their excessive evaluation of these future contributions often leads to disastrous consequences.

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Overestimating oneself often leads to bad hiring decisions, as most employers overvalue the conclusions they draw from interview impressions. The correct strategy to prevent this foolishness is to downplay the interview impressions and emphasize the job seeker's past performance.

I once correctly adopted this practice when I served as the chair of an academic recruitment committee. I convinced other committee members not to interview job seekers but to hire the person whose written application materials were much better than the others. Some said I did not respect the 'normal procedures in academia,' but I argued that I was the one truly respecting academia because academic research shows that impressions from interviews have very low predictive value, and I was applying this finding.

People are very likely to be excessively influenced by face-to-face impressions because, by definition, face-to-face impressions involve people's active participation. For this reason, modern companies face significant risks when recruiting senior executives if the job seekers are good at talking.

In my opinion, when HP interviewed the articulate Carly Fiorina (who served as HP CEO from 1999 to 2005) for the position of new president, it faced such a risk. I believe: (1) HP's choice of Ms. Fiorina was a bad decision; (2) If HP knew more about psychology and took appropriate preventive measures, it would not have made this bad decision.

Tolstoy's works contain a famous passage that illustrates the power of overestimating oneself. In Tolstoy's view, the most hardened criminals do not consider themselves so bad. They either believe (1) they have never committed a crime, or (2) considering the pressures and misfortunes in their lives, what they have done and who they have become is entirely understandable and worthy of forgiveness.

The latter part of the 'Tolstoy effect,' where people do not change themselves but find excuses for their terrible behaviors that can be changed, is extremely important. Since most people come up with too many absurd reasons to justify their changeable bad behaviors and try to feel justified, it is very necessary to adopt strategies at both personal and institutional levels to limit the damage caused by this foolish notion.

On a personal level, individuals should confront two facts: (1) If a person can correct their bad behavior but instead makes various excuses, then their character is questionable, and they will suffer more losses; (2) In demanding environments like athletics teams or General Electric, if a person fails to deliver the expected performance and keeps making excuses, they will eventually be dismissed.

The institutional countermeasure to address this 'Tolstoy effect' is: (1) Establish a fair, talent-driven, and strictly demanding culture, combined with human resource management methods that boost morale; (2) Dismiss the worst rule breakers. Of course, if you cannot dismiss, for example, you cannot 'dismiss' your child, you must make every effort to help that child solve the problem.

I once heard a particularly effective story about educating children, the child continued to remember the lessons learned even after 50 years. The child later became the dean of the School of Music at the University of Southern California. When he was young, he used to sneak confectioners from his father's boss's warehouse and when his father found out, he tried to explain that he planned to put them back later. His father said, 'Son, you might as well take whatever you want, but every time you do that, consider yourself a thief.'

The best way to avoid doing foolish things due to overestimating oneself is to force yourself to be more objective when evaluating the worth of yourself, your family and friends, your possessions, and your past and future actions. It's very difficult to do, and you can't be completely objective, but it's much better than doing nothing and allowing natural psychological tendencies to develop unchecked.

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Although overestimating oneself usually has negative effects on cognition, it can also lead to some bizarre successes because sometimes excessive confidence happens to contribute to a certain success. This factor explains the following saying: 'Never underestimate those who overestimate themselves.'

Of course, sometimes high self-praise is justified and much better than hypocritical humility. In addition, if people feel proud because they have completed a task excellently or have a beautiful life, then this kind of self-appreciation is a very constructive force. Without this sense of pride, there would be more plane crashes. 'Pride' is another word overlooked by most psychology textbooks, and this oversight is not a good idea. Interpreting the parable in the Bible about the Pharisee and the tax collector as a condemnation of pride is also not a good idea.

Among all beneficial forms of pride, perhaps the most admirable is the pride that comes from being trustworthy. Moreover, as long as a person is trustworthy, even if the path they choose is rough, their life will be much better than those who are not trustworthy.

Editor/Lambor