In this, my second post on Geoff Colvin’s Talent Is Overrated (Portfolio, 2008), I’ll look at ways in which top performers perceive more than average performers do.
First, where speed is important they improve their reaction time by looking into the future. This is an important point, however absurd it may seem on its face. For instance, in trying to judge where a tennis serve will land, average players look at the ball; the best players look at the opponent’s stance—hips, shoulders, arms—in the instant before the racket hits the ball. This will foretell where the ball will land. In a totally different context, ace typists get an edge by looking farther ahead in the text.
Second, top performers grasp the significance of indicators that average performers don’t even notice. Colvin cites the divergence between the rapidly rising sales volume of extra-large clothing and the alleged fitness trend of the 1980s; today the outcome of that divergence is only too obvious. Or they find “reliable” relationships in the financial markets that others have ignored.
Third, they know more from seeing less. As Colvin points out, getting information is expensive both in terms of time and money. So it’s a competitive advantage to be able to make sound decisions quickly and cheaply.
Fourth, they make finer discriminations. That is, they can see differences that others don’t in the same way that Charles Revson (of Revlon fame) could apparently distinguish several different shades of black.
Naturally, acquiring these four perceptual skills requires training and practice. And the training and practice can’t occur in a generic setting such as the Nintendo brain games. A trader has to practice perceiving more in the trading world; the skills he learns are not, in general, transferable to another sphere.
As with everything else in trading, there are no well-defined routes to acquiring this skill set. But Colvin defines a goal that far too few traders even contemplate. They practice entries and exits, they practice assuming winning mind sets, but who practices perceiving more? Perhaps the top performers or soon-to-be top performers.