Value investors believe that Mr. Market’s mood swings offer them excellent opportunities to buy low and sell high. But how does an investor avoid becoming Mr. Market rather than taking advantage of him? Influence, by Robert Cialdini, helps us understand the factors that influence us, which are exploited by, among others, the news media, our brokers, and research analysts, and thereby puts us in a position to protect ourselves from our own, hard-coded biases that we wouldn’t otherwise know have been triggered.
In this the final chapter, Cialdini reminds us of how important it is to recognize the shortcuts we employ in the making of decisions, as described in the previous seven chapters. He argues that as the amount of information which is at our fingertips continues to grow (thanks in large part to the internet), humans will increasingly need to use the cognitive tools we have developed to make decisions.
These shortcuts are useful. Without them, we would need to analyze every detail of every situation, often duplicating the work of others or even ourselves. But their use also makes us vulnerable to error. Compliance practitioners who understand these shortcuts can use them against us.
Cialdini urges readers to be aggressive against such practitioners. We should shun products that use such tactics in their advertisements, and send letters to the ad agencies demanding honesty in their marketing. He also advises that we refuse to watch tv programs that use canned laughter, refuse to tip bartenders that we see filling up their own tip jar, and shun night clubs with line ups that offer false evidence of the club’s popularity. Boycott, threaten, confront, and censure, in order to retaliate. It’s the only way to ensure that these shortcuts remain useful.
