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The Choice is Yours: Personal Responsibility & The Abilene Paradox

Helen Chorley, investor and former investment banker, comments

Despite living most of the year in a warm climate, I don’t really eat a lot of ice cream. It’s just not my go-to when I need that ‘thing.’ It’s also not the sign of summer that it is in the UK, because it’s almost always summer here in Malta (to a Lancashire lass anyway!). That’s why I moved here. So I’m generally not that bothered about gelato. That said, the occasional day comes when I would walk over hot coals for say, Haagen-Dazs Macadamia Nut Brittle. Anyway, I recently had an interesting exchange over an ice cream counter that made me think about investment choices, and this month’s article.

I went to an ice cream parlour on a recommendation. It was a smallish, artisan-y type place with just eight flavours. They all looked tasty and the place was busy. While not a new place, I had never been there before. My instinct said that my first scoop should be greek yoghurt flavour, and the second blackberry sorbet. But since I’d never tried their ice cream before, I wanted to pop the gentleman a question before ordering. ‘I think I know what I want,’ I said, ‘but which is your most popular flavour?’ He looked at me and paused. ‘Oh I don’t know. They are all popular!’ None the wiser I was about to order when he then continued, ‘Why are you asking what other people are ordering? You should order only what you want! Why do you want to do what everyone else is doing?’ Good point, I thought. I felt kind of embarrassed. Was I really a sheep when it came to ice cream? And how off-brand of me, when usually I am very comfortable doing my own thing. I ordered my ice cream, paid and left, a little put out.

But then the penny dropped. For me, it is independent to do that kind of research. Rather than just go with my first choice or just on the reassurance provided by the recommendation of this establishment I had already received from my friend, I wasn’t satisfied to make a decision until I could compare my individual choices within a context. I wanted to see where my personal instinct crossed over with market proof. In asking this question, I would to my mind be more likely, arguably, to choose their best, most enjoyable flavour; which could mean that I would have a greater probability of enjoying a product I’d never sampled before. Plus, I would have strengthened my decision based on evidence already documented in one way or another. Does it mean I would have gone for a popular flavour over my own choice? For me, very unlikely (what if it had been Bubble Gum flavour? Yuck.) But I would have had more information to make a choice with, and felt even more satisfied I’d made the right one. It’s a balance between choosing what is right for me as an individual, and respecting what has been proved successful for a larger number of people. As I finished my sweet treat, I managed to resist going back in to make this point to the ice cream vendor. Some people don’t need Helen on a hot day! But I’m going to explore this here because this dichotomy has UK Real Estate written all over it.

In property, it seems the tendency is to do one, or the other, but not both. Either we go with our own ‘fancy’, picking up investments that are brilliantly advertised (or are being peddled by personalities larger than our own), asking too few questions, and putting all our ice cream balls into one cone. Or, we go with the crowd, choosing deals based on someone else’s risk profile and appetite (which still carry risk; just risk that we’re not fully appreciating because we think the risk is reduced by the group). Then, when in either of these situations it doesn’t work out and we lose money, we point the finger, saying things like ‘we never believed in it in the first place,’ or ‘the investment pack was misleading’ and so on.

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