December 29, 2017

Gorillas in the mist.

Management comment

For our first letter in 2018, we have opted to recount the results of a psychological study carried out in 1999 by two American researchers from Harvard University, Christopher Chabris and Daniel Simons. The study involved a group of participants viewing a video in which two teams of basketball players, one dressed in white and the other dressed in black, pass a ball around. The study group were asked to count the number of passes between the members of the team in white.

During the session which lasts at least one minute, a person disguised as a gorilla crosses the scene during several seconds. The participants were then required to state the number of passes they counted and whether they observed an unusual event during the session. The result is surprising as the majority did not see the gorilla cross the scene.

This experiment demonstrates that paying too much attention to a particular objective, rather than inattention, prevents us from detecting unusual or unexpected events. Although our intuition would suggest that a surprising event will capture our attention, concentrating on a predetermined objective prevents us from being alerted. The gorilla test illustrates our shortcomings in terms of attention and a certain form of perception blindness.

In 2018, fund managers may be confronted with the gorilla test. Like the participants in the study, fund managers concentrate on a specific objective, i.e. performance. They may therefore fail to spot risks (gorillas) even though they use their training and technical skills to instinctively assess the full scope of potential surprises.

Let us hope therefore that during the New Year, which we hope will bring you every success and happiness, the DNCA fund managers will be able to spot the gorilla even if it is hidden in the mists of the financial markets.

Igor de Maack, Fund manager and spokesperson at DNCA. This article was finalised in December 29th, 2017.

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For our first letter in 2018, we have opted to recount the results of a psychological study carried out in 1999 by two American researchers from Harvard University, Christopher Chabris and Daniel Simons. The study involved a group of participants viewing a video in which two teams of basketball players, one dressed in white and the other...
2017-12-29