Emotions: Their Role in the Decision-Making Process II

Yesterday, in Emotions: Their Role in the Decision-Making Process, I looked at some of the comments D’Amasio made in a recent interview. Today I’d like to look at some of the ramifications arising from the interview.

Firstly, the comments validate the findings in The Cambridge Handbook of Expertise and Expert Performance.

The Handbook studies suggest that mastery is optimised when we engage in:

  1. Deliberative Practice
  2. Time spent at Deliberative Practice
  3. Assistance from a mentor.

In turn deliberative practice can be broken down to:

  1. Identifying a long-term outcome
  2. Breaking down the skills that lead to that outcome into its component parts.
  3. Engaging in practice sessions that:
  • Have their own predefined goals
  • Have benchmarks to measure progress and
  • Have immediate feedback.

All of the findings are in line with D’Amasio’s  findings about the role of somatics.

Secondly, the work of D’Amasio contradicts the idea we trade best as emotionless robots. Indeed in one work (I can’t remember which one), he states not only is emotionless decision-making not possible, it would not be desirable even if it were possible. Somatics have an essential role to play in the decision-making process.

Emotions warn us long before reason when danger lurks. Sometimes however, they may react to ‘danger’ not present in reality but rather in our imagination. To harness the power of emotions, the keys are when feeling strong emotion:

  1. to become aware of them.
  2. to question whether their source is valid i.e. is it a real and present danger or an imaginary one; and
  3. to act in accordance with (2).

In my view, the best way to manage our emotions productively is with thorough preparation which includes visualization. Since our mind cannot tell the difference between what is real and imagined, a mental rehearsal will blunt a possible traumatic event so that we can deal with it effectively should it occur.

Finally in the interview,  D’Amasio suggests that because somatics take time to form,  the speed of 21st century life blunts our conscience. And, when that happens, – when our reason is cast adrift from our emotions – we are left free to justify any act. Perhaps that explains why Madoff thought he could hide the US$50B theft.

3 thoughts on “Emotions: Their Role in the Decision-Making Process II”

  1. Great couple of posts, Ray. The concept of “deliberative practice” is, I’ve found, a true life-changer in the markets. I also spent quite a bit of time this year vizualizing my responses to certain market events and individual trade outcomes. I can’t say that I’m perfect by any means… I still hang on just a few beats too long at times (refusing to kill the hope that springs eternal!)… but this year I managed a 56% return in my accounts, much of it on the long side. Also, your concept of Ebb and Flow has also been very influential to me this year. I learned to recognize more quickly when I “ebbed”, and my response to THAT (having vizualized it beforehand) saved me. I cut WAY back on my trading size and frequency until I felt the “flow” return.

    Thanks again for your past generosities.

  2. Hi Jeff

    56% is truly fabulous! If some of my posts assisted you in attaining that, then you have helped my with my outcome. So, I thank you.

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