Lessons - The Hidden Psychology of Wall Street | Denise Shull - Performance Coach to Hedge Funds

In this lessons episode, explore how emotion-shaped decision-making and why ignoring them leads to flawed outcomes. Discover how fear and embarrassment quietly drive bias and ego in high-stakes choices. Understand why identifying what is being felt matters more than suppressing it, and uncover how acknowledging emotional signals early improves judgment, adaptability, and long-term results. But a lot of people probably were so odd by the work that you're doing because most people don't even know where to begin looking like. The decision-making process is sort of taken for granted. I think that in our day to day we don't try and delve into why we make the decisions that we make. It's a scary concept because when you unpack that, then all of a sudden, if you unpack the first bit of it and you understand that maybe why your decision-making process is flawed, then that leads to the question, well, then how do I make a good decision? And that's a question I have for you. So what do you recommend people after you if after you sort of show them the light, so to speak, and they start to understand that every decision that they make has all these biases attached to that decision, then how do they go through life? Yeah, so the question to learn to ask yourself and the answer accurately, those are two seven tasks, but is what am I feeling and why am I feeling it? And you want the answers to be the truth. Now, that's easier said than done. A lot of my coaching is like helping people get the accurate answer, because what they think they're feeling or why they think they're feeling is generally not what it is. This will, by the way, circumvent the cognitive biases. So a thing in the behavioral findings, cognitive bias, you know, confirmation bias, recency bias, the literature is Wig-Add, your human brain is biased, and there's nothing you can do about it, you know, and you're stuck with that. It's not true. It's based on the wrong model of the brain. It's based, I mean, it's called behavioral finance or cognitive behavior, because it's like thinking and doing, you know, thinking and behaving, you know, like the juices in the family. The cognitive behavior world doesn't get that. So like confirmation bias, when you see the thing you want to see. Well, everyone talks about how difficult it is to circumvent that or to a verdict. Well, all you do is like realize like what's that feeling? And what that feeling is usually like, if you, and this happens all the time with hedge fund managers, I mean, I had a relatively new client yesterday talking about like he went to his investment committee and he stated like his viewpoint and he's in commodities, you know. And so this is my viewpoint and how commodities are going to play out. And then he said, you know, if he starts to look like he's wrong, you know, he doesn't really want to go back to the investment committee and say, you know, on the second thought, never mind, I was wrong. Because why? Because it's embarrassing, you know, he's afraid he'll react negatively. So people behave in what looks like confirmation bias. I, they only see the data that supports whatever their viewpoint are against. Not because they're just programmed to do that. Because at the moments that they're seeing conflicting data, they're predicting this future emotion of, you know, that's unsafe, right? They're going to be embarrassed. Their boss is going to be mad at them. And they're basically trying to avoid that scenario. Well, the truth is if you face that scenario earlier in your process, whatever, the chances that you end up with the embarrassment go down. Because like when you, you've stated some, you know, prediction to your firm, whatever it is, I don't care, sales, investment, I don't care whatever it is. And you start to get information that's not working out the way you thought. Well, the sooner you get that and sooner you change course and address, you know, the better the odds of a better outcome, right? But if you delay, because you don't really realize you're predicting this future embarrassment, the outcomes probably worse. But like people have no cognitive ability to override that underlying prediction of embarrassment. Except to use their thinking to address, wait a minute, I'm really worried. You know, I don't want to try to be wrong, because I have sounded like an idiot that's going to be embarrassing and they've already been losing my job, just because people have tenancy catastrophes. But the truth is the earlier and incidentally, you can face, you know, alternative data that shows your prediction may not be turning up. Like chances are you can course correct earlier. But it requires knowing that you're feeling like you're predicting this future problem. That's going to give you, it gives you the spades to navigate. That you don't have, if you're just like torturing the data to prove that your original prediction is correct. While you're crossing your fingers and hoping and experiencing all the same anxiety, oh my god, I hope I try to do that. No. Well, when you say, when you when you lay it out, it actually makes a lot of sense. But I guess the issue that we're sort of uncovering is a little bit of like you mentioned, like we have biases, but after a certain point, there's ego involved. You just don't want to be embarrassed. So when you speak to people that operate at this level, the things that are fears, are they valid fears? Like in my opinion, they would be valid fears. Like if I make a sales prediction and it's totally off at any point when I bring that up with my board, they're probably going to have some level of there's going to be some thought like as to whether or not I'm competent. That's something that I feel like if you walk through the scenario, it's like completely logical, right? Like so this is the thing. Like an emotion, particularly like fear, has a totally bad wrap, right? Like you're not supposed to feel fear or give into fear or whatever. And it's not true. Like if it weren't for fear, there's a lot of accomplishments we all have that leave within to accomplish. Like who would really graduate from college if it weren't for fear? You do all this other stuff, you know, but you're afraid of the outcome of only partying and not getting the actual degree. Like so you do the work. You know, you really do the work just because you want it to work, right? Like you do the work because you're afraid of what'll happen. Like in their pure form, fear, frustration, disappointment, have information for us. So we've got two problems. We've been told not to recognize any of them and we've certainly been told not to focus on this so-called negative ones. When they're in their pure form, they're actually trying to help us. They're trying to keep us safe trying to help us get what we want. Like frustration is something's going wrong. Take extreme form of frustration. Well, extreme form would be like rage, but let's take an interim anger. Why do people get angry? Because they feel as if something's wrong. So at sometimes it is and sometimes it's their own personal expectation and that's like the next layer of this, what part is real and what part is your own personality, but we can come back to that. Like at its core, like if you're angry about something, your psyche is telling you that something isn't the way you think it should be. And maybe you should try to research yourself and find out what that is. This is supposed to say I shouldn't be angry. Because what the research actually shows is you suppress those emotions, particularly the negative ones. The voice in your psyche gets louder, so they become more disruptive, not less disruptive. And research actually shows this if you suppress it. Yes. I mean, there's, you know, I mean, the truth is, you know, in psychology research, you can probably find research to show whatever you want. That's fair, but yes. But there's a good body of research that shows that understanding your negative emotions, acknowledging them, leads to better outcomes. Particularly, but matters to you. Like there was, when I first heard of this research, it was probably 2008. And I met this woman who at that time was like a postdoc PhD, and she had done this research project to show that reframing, you know, situations was a net positive. And to her credit, her research showed that wasn't true. That if you reframed, in other words, you know, took a positive viewpoint or something on something that didn't matter that much to you, it worked. But if you did it on something that actually really mattered to you, your anxiety levels went up, and it didn't work. Why? Because your psychies, like your psyche really is trying to keep you safe. And that kind of includes more than safe. Like it includes thrive. So if you have some unpleasant feeling, it's like like, you know, all of a sudden, you feel this horrible pain in your leg, and you look down, and you know, you've got to gash in your chin for whatever reason, you know. Like what's the point? The point of the physical pain is like so that you do something. Why is it any different with emotional pain? Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.