A couple of conversations recently have highlighted just how stupid consumers often are.

Case in point, me.

I like to think I’m reasonably capable, astute, switched on, together. But that’s just what I like to think.

You see, I’ve been following this blog on investment (www.greatwealth.com/).  To begin with I felt sort of obliged to stick with it, I’d said to someone that I would look at it.  But it was a bit annoying.

The investment adviser there (Rod) seemed determined to spell out assumptions people have about investing with the implicit message that they didn’t stack up.  Rod did say he would tell us why, but my resistance was, if anything, increasing as the days went on.

You see I know about investing.  Well, when I say “I know” that’s not totally accurate.  It would be more accurate to say that I have invested money in my time, like a lot of people. 

My “knowledge” is really no such thing.  It’s a market-driven, or rather marketing-driven, perspective of how investment works, derived almost entirely from what I see people doing.

If someone said you should do something just because it’s what everyone else does, you would give them that funny look you like to use just before you walk away dismissively.  And yet we make tacit judgments all the time entirely on this basis.

And I should know.

My biggest professional challenge is pointing out to people that, despite the fact that billions of dollars are spent on it, consumer research doesn’t work.  When it comes down to it, and given that even people who use research regularly find bits they disagree with and so could hardly be classed as true research theists, the main reason everyone does it is because everyone does it!

And as I’ve learned from Rod’s blog, it takes time to point out to someone if prevailing wisdom isn’t very wise.  But most marketing happens in moments, not minutes, let alone hours.  And that’s a big challenge.

Philip Graves

18 Comments

  6. Duane Cunningham

    Hi Phil,

    As always you are spot on! Kevin was just sharing a study on investments where professionals and school students where asked to select a group of stocks and then predict what % they thought would be right…87% of the professionals said they would be right and 59% of the college students….the facts rolled around at the end of the study…..52% of the college students were correct (not bad!) and wait for it….40% of the professionals….hmmm makes you wonder doesn’t it!

    Duane

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  7. Steve Chambers

    Spot on Phil. I was recently reading about how accurate economists are at predicting recessions. The assumption is that they are the experts, but they have been wrong historically 100% of the time.

    The best advice is to trust your own experience and education and try to see what the agenda of the person telling you something is. Most of the time if their is money involved the advise is compromised.

    Steve Chambers, The Sales Expert

    The Sales Eagle Solution – 12 months to dominate your market

  9. Christian Haller

    The problem with experts and really smart people is that they “know” they are right – and probably are given the information they have. But “knowing” they are right, often leads to a blindness of the facts and so they don’t keep looking for new info and get lazy. People who know they don’t know, tend to have a more open mind. Anyway, that’s my theory and I know I’m right. 🙂
    Christian Haller
    Good Food Fast & Easy
    Healthy Italian Recipes

  11. John Ho

    Phil,

    There’s always danger and blind spots when anyone insists that s/he is right.

    At my last Tues FREE Intro on Pure Numerology, with the theme as Understanding Personality for Better Influence & Persuasion, I told the class that it’s up to them to judge to what extent I was spot on. That’s no point to say that I was perfect e.g. in my knowledge on the subject. They needed to verify for themselves. Don’t follow me (or anyone) blindly.

    John Ho
    Numerology Expert Helps Understanding Personality for Better Influence & Persuasion (WordPress Blog)
    Numerology Expert Daily Numeroscope (Vox Blog)
    Numerology Expert Helps Understanding Personality for Better Influence & Persuasion (Money Page)

  12. Pam Schulz

    Phil,

    What a refreshingly candid post. I know that Rod at Greatwealth.com will be greatly honored that you kept on faithfully reading his blog despite your initial misgivings. I imagine this exercise was even more challenging for someone like yourself who is an expert in consumer behaviour. It’s a testimony to your professionalism that you stuck with it.

    Pam
    Invest in Your Future

  14. jc mackenzie

    Being completely in the dark about investing, I’ve enjoyed Rod’s posts as well, at least now I have a better understanding about how the puzzle fits together. Makes you wonder about the majority of the experts doesn’t it-if a great number of investment experts “follow the crowd”, would it not make sense that it would also happen in other fields as well?

    JC
    JCMACKENZIE.COM

    Making money-reviews

Comments are closed.

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