Stories of the Institutional Past #6
Ego
Ego is an omnipresent feature in the financial world. In the classical definition, the word "Ego" refers to a person's sense of self, identity, and self-importance. It's a psychological concept that plays a crucial role in how individuals perceive themselves and interact with the world around them. The ego is a part of Sigmund Freud's psychoanalytic theory and is one of the three components of his structural model of the mind, along with the id and the superego.
As far as this post is concerned, we will be talking about the term as it refers to a person's self-esteem, self-worth, pride, and the often inflated or self-centred sense of importance and superiority. I am sure you have come across people with precisely those characteristics. If not in the real world, there is also an observable nature of those characters all around Fintwit.
I never had a massive sense of superiority or ego, as it were. I also often struggled with my sense of self-esteem in my younger years. Only through sports and then through my academic and working years I grew more confident in my abilities. I guess coming from a more humble background kept me grounded. When I started in the financial industry, it was very quickly apparent that dealing with people with large egos was not straightforward.
I discovered this rather quickly when I worked at a large investment bank straight out of university. My task was to talk to the credit traders and collect information as to where certain corporate bond spreads were trading. “Unchanged” was the response by the head trader responsible for the more volatile “TMT” names. I responded that surely that can’t be correct as the market saw massive moves (that was in 2002 during the whole Worldcom saga). The trader got up and left the desk, murmuring that I should take his seat. I didn’t realise his anger and promptly sat down on his seat, enraging him even more in the process. I learned from then not to poke his ego.
Having experienced several people of such ilk throughout my career, I often asked myself what brings people to be like that. I am very tolerant, mostly due to my upbringing and the lessons I learned from my parents, who taught me not to judge. “You never know what other people are dealing with” was the good advice of my late mother. It is true. Analysing my own behaviour over time, it is just natural not to let your true self appear in a working environment; certainly, don’t show your weaknesses.
This is also quite apparent when you compare men and women in a working environment. I have to say, there is an unfairness towards women, at least where I worked, as in they are not allowed to show their emotions. This is very much to the contrast of men, who are allowed to pick up a computer monitor and smash it against the wall. They look like heroes. Women, when angry or emotional, are deemed to be weak and “out of their element”. I heard it over and over again. Hopefully, this has changed by now.
Observing egos over time just led me to a very clear explanation. Insecurity. This might seem counterintuitive at first glance, but there's a psychological explanation for this phenomenon. When individuals have an exaggerated sense of self-importance, it is often a defence mechanism to mask underlying insecurities or feelings of inadequacy. It is certainly some sort of coping mechanism for those I have had the chance to observe over longer periods of time and get to know better.
I had the chance to share a business trip with one such person where, after a few drinks, they opened up a bit and revealed glimpses into their personal lives. Turns out everyone has problems, and in this instance, it was a particular trauma related to the person’s upbringing where he had a torn relationship with his parents. This motivated him to become the most successful version of himself in terms of status and money. He admitted, however, that this neverending pursuit left him in a more unsatisfied state.
You can have a profound sense of self-worth yet not portray a strong ego and negative behaviour to others. A very good friend of mine is one fine example of such traits. His humility is something I always aspired to. He is probably the most chilled-out person I ever worked with. He was also, and still is, an intellectual beast. In a room full of people, he would make his opinions heard without ever trying to persuade someone and respecting other opinions. He treated everybody as equals. This is how meetings should work. I covered some of this aspect in a recent story, which you can find here.
Ego kills, sooner or later. That is certainly true in the money-making business. That is why I continue to stress the importance of knowing yourself and working on your blind spots. The market’s task is to test you and your character. If you have an ego built on weak foundations, you will be found out. It will hurt. Don’t equate ego with your wealth and achievements. Ego is much more the result of having dealt with your weaknesses and overcome testing times. Insecurities will always linger as they are hard to shake off. Finding balance is the key. I am still fighting my demons. I noticed how my ego was attached to my monthly paycheck and job title. It took a while to rid myself of it.
Equally, I do flare up when people try to dominate. Be it by showing off their wealth and material possessions. I had one such episode last summer at a friend’s birthday party. There was this guy, a wealth manager, who cornered my wife, telling her of all the amazing hotels and places he had been, only to find out that she had already been there. That infuriated him. Once I got to speak to him, he was trying to tell me all about finance. I like being underestimated. Much to his disgust, he found himself short of any great arguments when he tried to convince me to invest with him. I felt good for a few minutes and then sorry for him for the rest of the evening.
I am clearly far from finished in shaking any sense of ego as I strive for a more stoic life. Similarly, I am working hard to link a healthy sense of self-worth to unshakable things and principles. It’s not easy, but it's worth the effort.
Get rid of your ego; it’s way more fun.
