How Decision Making Is Affected When It All Gets Very Complex
I have been writing about intuitive decision making because the world is becomes increasingly complex, and it is doing so by leaps and bounds. As a result we have to not only learn to use our intuition but also to balance it out with our rationale mind. It is extremely difficult to find the flaws in opposing points of view on the major forces driving the world. Anybody who seems to know more about a particular subject than you do can make a believable argument. This happens until you are simply left bewildered. (As an aside there is a fascinating eighteen minute presentation on the history of complexity that is worth the view. )
So how do we proceed?
Take the raging debate over the debt and the rising price of gold. Here is one point of view saying that the debt situation is very manageable.
Here is another article that says the mood of the world is not so sure as the price of gold is reflecting the steady deterioration of the dollar and looming inflation, yet asking whether things have gone too far.
So what is it to be?
One group of people believe that human nature, being what it is, leaders will take the easier path and printed money will eventually be in crisis. Precious metals as a store of value is the way to bet.
Another group feels that the complexities of the world require a more sophisticated management of flows of money and government roles in stimulating and applying brakes to the economies of the world. Ultimately after a crisis people will sort out what has to be done and do it.
When things were simpler, one felt they could understand all of the pieces and grasp the most likely scenario to emerge. But now with the level of complexity accelerating, like a rocket ride, we have to depend more and more on our intuition. Yet we also need to bring some discipline from the left side of our brain and learn to balance the two areas.
In the example above for example I decided in my financial management model that I would allocate ten percent of my portfolio to a gold as a hedge against inflation. This was an intuitive decision and made a few years ago. Now because gold has increased dramatically over the last several years I have exceeded my ten percent thresh hold. So I am now selling the gold down to the ten percent level not because my intuition tells me it is going higher or lower, but because it has exceeded my original allocation levels.
My point is that we must use our intuition more and more and balance that out with our rational mind. In the example I have given above someone might be saying, “Why aren’t you using your intuition to decide whether to stay in your investment or not?” The answer is that I have met my objectives and diversification is part of my over objective.
I would like to hear how you dealing with complexity and balancing the intuitive and linear decisions you must make daily.