Who Is Stealing Your Attention?

Last week I sold an ordinary $100 bill for $235 to two sophisticated investors. I was a speaker at the Stansberry Conference where I gave a talk on Behavioral Defense In Investing. My opening act elicited laughter from the audience as they watched one of their peers bid over a hundred dollars for an unremarkable $100 bill that had no reason to be worth anything over that amount. Hopefully it also convinced them of the need to guard their minds when making serious financial decisions.

The conference is also where I met an extraordinary gentleman. He was a fellow speaker who goes by the title of The Gentleman Thief, aka Apollo Robbins. The man can literally steal anything from anyone after warning them he is about to do so. He had even managed to steal something from the Secret Service. If you haven’t watched this short video of him demonstrating his craft, I highly recommend it.

I have to admit that I initially underestimated Apollo. I first met him at the cocktail party the night before our respective talks. Watching him steal wallets and watches from people was entertaining enough. I thought him a master of a narrow craft, nothing more.

I even asked him if everything he was doing was just misdirection. “No,” he replied, “it’s more about curating attention.”

The next evening Apollo was kind enough to complement me on my talk and I told him how impressed I was with his, and we dove into an in-depth discussion. It turned out that Apollo really studies how the mind works and knows some of the same world-class behavioral experts whom I know or whose works I have read. Quite impressive.

Two things that I learned from him stood out as relevant to making investment decisions.

First, Apollo showed us a video where a group of study participants’ eye focus was scientifically tracked and represented by bright dots on the screen. Starting with two hands held close together, one hand was moved away, opening up the body. When the hand was moved in a straight line, the eye focus of the participants was split between the hand that was moving, the hand that remained still and Apollo’s face. However, when the hand was moved to the same destination in an upward arc, all focus shifted to the moving hand, leaving participants paying no attention to the other hand. That such a small change could have such a dramatic impact on where our attention was focused is fascinating.

Second, he told me that he also sometimes does the $100 bill auction that I had performed at the beginning of my talk. Apollo said that he has a follow-up to it that he does with the “winner” of the auction, and asked if I wanted him to show it to me. Intrigued, I agreed.

He gave me a ring of his and told me to hide it in one hand behind my back, and then show him the hands with fists closed. He guessed the hand and… got it right. I hid it again, he guessed and… got it wrong! He said something about him still calibrating his read on me. We did it again, and this time he got it right. Two out of three.

Now he told me that he would be the one hiding his ring behind his back, and I would be the one guessing. Focusing intently, I looked at both hands, chose left, and… was right! He did it again, I guessed left again, and… was again correct. We did it a total of four times, and I got it right every time.

By this point, I was smiling, thinking to myself about how clever I must be to have “cracked” this master of misdirection so quickly. Apollo smiled, understandingly, at me and asked, “How do you think you are getting it right every time?”

“Well, I used to play poker. So maybe it’s a tell I am picking up?” I ventured. “I mean, I wasn’t great at poker or anything, but maybe at a subconscious level? I guess it is quite unlikely to get it right four times in a row just randomly, I mean the odds would be 1 out of 16, no?”

Apollo nodded. “Would you like to see the other hand?” he asked. “Sure,” I replied.

And then I felt like a total overconfident idiot. Apollo opened his right hand, and in it, of course, was an identical ring to the one he had been showing me in the open palm of his left. I had thought he was trying to keep me from winning. Nope. That wasn’t the point.

“Don’t feel bad. I have done this many times and everyone falls for it. Nobody ever questions why they are winning so much. They all come up with some skill-based explanation.” Oops.

How is all this relevant to investing and making decisions?

First, we might be aware of what we are paying attention to. But how aware are we of what that’s making us not pay attention to? One of Apollo’s points stuck with me: “The easiest way to steal a man’s watch is to tell him you are about to steal his wallet.”

When you look at daily stock prices or the monthly performance of the fund that you are invested in, what are you not thinking about? When you are worried about how demand will trend in the coming quarter for a company that you are invested in, to what degree does that take your attention off the decisions the management is making that will impact profits in 5 years? And when your financial advisor appears in a fine suit, complements you and works hard to get to know the names of your children, what might that take your attention away from?

Your attention is a finite resource. Whether it’s the environment you choose to surround yourself with or deliberate influence attempts of others, you must protect yourself and focus it on what you think matters.

Second, how much do we question our investing successes vs how much should we be questioning them? I have heard many brags from people who bought a stock that then went up in the next 3, 6 or 12 months. Almost never have I heard someone say that their stock went up despite their decision to buy it having been a bad one. And yet, that must happen quite a bit.

We humans have an innate need to create a causal narrative around events. If someone has good results, it must be because they did something right. If there is a stretch of bad performance, the manager must be making major mistakes. That’s far more satisfying than admitting how much is out of our control, especially over relatively short periods of time.

Yet the reality is that most of the short and intermediate-term outcomes are affected by randomness at least as much as they are by our intentional decision-making. In Warren Buffett’s famous Superinvestors of Graham-and-Doddsville article he presents a number of investing track records, most of them quite impressive. One of them, however, is downright awful. This one guy had underperformed the market every year for three years in a row. Not only that, but his partners experienced a cumulative decline in the value of their investment over those three years of 50%, more than twice the decline in equity markets over the same period.

This one “guy” was Charlie Munger. His partnership’s overall record for his limited partners was of returns of over 13% per year over a 14-year period when the Dow produced annual returns of 5%. That’s a cumulative return for his investors that amounts to over 5x that of the market!

What you pay attention to matters, even more so because of the other things it makes you lose sight of.

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

Note: An earlier version of this article was published on the Behavioral Value Investor Substack