Nearly 20 years ago the Fox network began airing a TV show called American Idol. Thousands of unknown singers showed up to audition. And after multiple rounds of competition, the cream rose to the top and we saw that there really was great talent just waiting to be discovered. (Kelly Clarkson won that first season.)
But that was only half of the show’s appeal. The other half was seeing the auditions of the contestants who believed they were excellent singers, but in many cases could not even carry a tune. The fact that they were not good at singing was apparent to the show’s producers, the judges, and millions of viewers. But not to themselves.
American Idol didn’t discover that people can have a skewed image of their attributes and abilities. Overestimating our abilities has always been recognized as a part of human nature. (Previous generations called it vanity.) And we all have it to some extent.
When it comes to investing, overestimating our abilities, or those of someone attempting to predict what will happen next, can be costly.
A recent survey by OnePoll found that 81% of U.S. residents say they believe that humankind is basically good. And 46% went a step further to say that, in their eyes, they are “better than everyone else they know.”
That 46% might be a little low. Those of us who think we’re superior often don’t like to admit to it. But even more striking, if you’re among the 81% who think humanity as a whole is good, then ranking yourself as “better” necessarily makes you very good—at least in your estimation.
It feels good to have a high opinion of yourself and your talents, and each of us needs to know that we have inherent worth as human beings. But thinking that we are better than we really are can be a hindrance to becoming better. Understanding this fundamental truth is why it makes sense to coordinate your financial life and investing with me.
You must believe you need to improve in order to take the steps necessary toward being better.
Record-setting athletes like the NBA’s Stephen Curry and the NFL’s Justin Herbert both talk in terms of how much they can improve. An example from the arts would be legendary pianist Vladimir Horowitz, who had his nine-foot performance Steinway piano loaded into his apartment by crane so he could practice on it every day.
We all know people who, like the American Idol contestants, are absolutely blind to their shortcomings in certain areas, and who would be surprised and upset if we pointed these out to them. But since we’re all human, we can assume that we all have these blind spots as well.
Scottish writer and comedian A. L. Kennedy advises, “Have more humility. Remember you don’t know the limits of your abilities. Successful or not, if you keep pushing beyond yourself, you will enrich your life—and maybe even please a few strangers.”
Humility is the virtue that allows us to objectively consider ways we can improve without harming our self-worth. “I’ve come a long way. But I can always do better.”
As always, we’d love to talk with you about the ways you can help you make 2022 the best year ever in your financial life.