The tendency to love and the actions that this tendency can result in, the most common effect being the loss of objectivity
26-Aug-2015 •Mohammed Ekramul Haque
What is it? This is the tendency to love and the actions that this tendency can result in. The most common effect of this tendency is the loss of objectivity.
Why is this tendency important to consider? Think of news reports of extreme steps that people take, being in love. The effects of the liking/loving tendency are more profound than they appear. Says Munger, "One very practical consequence of the liking/loving tendency is that it acts as a conditioning device that makes the liker or lover tend (1) to ignore faults of, and comply with wishes of, the object of his affection, (2) to favor people, products, and actions merely associated with the object of his affection and (3) to distort other facts to facilitate love."
Often found in: Individuals
In Life: The purest form of love is between a mother and her child. A child is born to like and love. The tendency to love is not restricted to blood relations. "Each child, will almost surely come to like and love, not only as driven by its sexual nature, but also in social groups not limited to its genetic or adoptive "family.""
The tendency to love produces another need - to be loved. "And what will a man naturally come to like and love, apart from his parent, spouse and child? Well, he will like and love being liked and loved. And so many a courtship competition will be won by a person displaying exceptional devotion, and man will generally strive, lifelong, for the affection and approval of many people not related to him."
There are positive sides to the liking/loving tendency. It can positively impact a person's life if he develops a liking towards an admirable person - a model worthy of emulation. "Liking or loving, intertwined with admiration in a feedback mode, often has vast practical consequences in areas far removed from sexual attachments. For instance, a man who is so constructed that he loves admirable persons and ideas with a special intensity has a huge advantage in life. This blessing came to both Buffett and myself in large measure, sometimes from the same persons and ideas. One common, beneficial example for us both was Warren's uncle, Fred Buffett, who cheerfully did the endless grocery-store work that Warren and I ended up admiring from a safe distance. Even now, after I have known so many other people, I doubt if it is possible to be a nicer man than Fred Buffett was, and he changed me for the better."
In corporations: Think how companies use celebrities to induce viewers to develop a liking for their products. The on-air promotion by Deepika Padukone of the Tanishq jewellery for her mom has more than 18 lakh hits on YouTube as of this writing. What if even a fraction of those viewers decides to visit the nearest Tanishq store?
In Investing: The most straightforward example where this tendency is visible is scores of investors and even fund managers who have gained from learning sound investing principles from Warren Buffett or Charlie Munger. In the absence of that influence, many investors would take other unproductive routes like technicals, short-term trading, chasing market trends, buying hot stocks, etc.
The flip side of this tendency is when an investor develops a possessiveness about a stock that he owns. An investor emotionally attached to his stock may consciously or subconsciously become oblivious of changing realities. Many investors continued to invest in realty stocks even as these companies piled on huge debts to get ahead in the bidding game. Many investors similarly kept on holding on to infrastructure stocks. They were caught between mountain of debts and slowdown in the economy.
You just read about one of the misjudgements people generally make while investing. Read 25 ways to (Not) make mistakes to get an account of Charlie Munger's twenty-five typical misjudgements, along with our commentary on how they fit into Indian businesses and Indian investments.