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Investors:What do priests and CEOs have in common?

September 13, 2010

Please answer my question before you read the answer: Become a successful investor because you are able to focus on one issue only in order to avoid clever answers like you would give on a TV show or in an average classroom. In my blog The Psychology of Investing based on my book with the same title, your only issue is how to make as much money as you can in the shortest time possible. That is your one issue and one issue only. Usually, at this point 9 out of 10 of my readers who focus on other things that they think are relevant will drop out, while the serious one who is left reading will say, “It’s the CEO, dummy.”

Stop reading and write down  your complete answer before you proceed: What do priests and CEOs have in common?

Commonly, 1 in 10 investors study behavioral economics enough to know that a CEO of a company is a major factor out of 4 that determines the value of shares you bought in his company (a variance of between 30% and 60%!) Only 1 in 10 investors also know that the shortage of qualified priests in the Catholic church or CEOs in Wall Street corporations has reached the crisis level, but only 1 in 100 investors knows that importing priests from one culture to run churches in another culture compromises the quality of worship (the other 99 think it enriches it), while importing  CEOs from one industry to run companies in another industry compromises the quantity of money you earn (the other 99 investors don’t think about it)!

There is a crisis in the Catholic church and in Wall Street because of politics. We as investors are only concerned about the scarcity of quality of CEOs. Because there aren’t many great CEOs like Bezos, Jobs, Page or Zuckerberg to go around, chances are that your CEO is a mediocre import from another culture and he is losing you money! Have you looked lately at your portfolio without rationalizing what you see?

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