I recently attended the Chartered Financial Analyst conference in London, listening to speakers telling us about impending disruption. They focused on the rise of populist politics, highly evident since the 2008 global financial crisis, geopolitics, big data and its intelligent analysis, and climate change.
We were told, as an investment community, to restore trust in our industry, to see opportunities rather than fear, that investment returns must increasingly help society and the environment, and that capitalism was at risk.
Speakers encouraged reflection, urging us to take control of our destinies or an angry millennial generation would. We were urged to embrace disruption and feel comfortable with feeling uncomfortable.
All very interesting and dramatic, but not too helpful with specific solutions.
One session that was useful came from behavioural author Daniel Pink. He looked at the science of timing in organisational, business and personal life and when we should best make decisions with reference to our daily mood profile.
We all follow a rise, peak, decline, trough and recovery pattern, and our cognitive abilities change materially during the day. Pink highlights that the time of day can impact performance by up to a significant 20%, as evidenced in many domains such as financial, judicial, athletics and medical.
Obviously, the afternoon trough should be avoided for many things. There is evidence that company earnings calls in the afternoon are viewed more negatively, leading to temporary stock mispricing. Pink advises doing earnings updates and similar analytical activities earlier in the day.
He also advises that educational tests and exams should not be held during the trough time of day. It has been shown that for every hour later that a test is held, the detrimental impact on performance is equivalent to missing two weeks of school.
In hospitals, staff become less vigilant at that time about the washing of hands, which in turn increases hospital acquired infections. For those undergoing afternoon colonoscopies, the detection rate of polyps halves; and anaesthesiology errors are four times more likely at 3pm than at 9am. Avoid the roads, as driving between 2pm and 4pm is proportionately the most dangerous time.
However, this does not mean to say that the afternoon trough is a complete write-off. The best time to perform a task depends on the nature of that task. Pink suggests that analytical work is ideally done during the peak, as this is when we are most vigilant and can bat away distractions. The trough is suitable for administrative tasks. The recovery period, when your mood is up, although your vigilance is not, is appropriate for creative thinking, brainstorming and broad-minded insights.
Pink observes that so much of our time is spent in meetings, but we pay no consideration to their performance and productivity, and only consider the logistics of when everyone can get together.
The daily mood pattern inevitably has outlier variations for the early bird and night owl personalities, with these minorities peaking earlier or later than the norm.
Looking at longer term mood patterns, Pink says that many people decide on key events, such as running their first marathon, when something is coming to a close – for example, at the end of your 20s, 30s or 40s. “When we sense an ending, we get energised and kick harder.”
Pink recommends we sing in a group, as this has an extraordinary impact on mental and physical well being. When taking a work break it must be spent with other people or in nature. As people prefer the rising sequence to the declining sequence, give bad news before the good, and always end a presentation on an elevated note. Try not to start your career in a recessionary trough as your earnings will always lag behind.
Just noticed I am writing this at 3pm and ending it on a low note – should have waited until returning from evening choir practice.
• Gilmour is an investment analyst.
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