7 Actionable Tips on Developing Your Emotional Intelligence [Podcast]
Warren Buffett has said that if you want to be a great investor, what’s more important than IQ is emotional control. He jokes that if you have extra IQ, you should sell it because you don’t need it in investing. He’s seen a lot of very smart people do a lot of very dumb things.
Managing your emotions can help with more than business. Any interaction you make, with a coworker, boss, family member, or stranger can go right, mediocre, or horrible because you do a poor job of understanding and handling your emotions and motivations and those of others.
So how do you check yourself before you wreck yourself? By developing your emotional intelligence! Here are six tips to improve your emotional intelligence.
When I first thought of managing emotions, I just thought of anger. Once you control anger, everything’s good, right?
No, there’s hundreds of emotions out there. Take greed. Warren Buffett mention a lot of people who screw themselves over even though they are already rich by putting all of that money at risk to make more money they don’t need, like Long Term Capital.
Long Term Capital Management’s team was made up of the smartest people in the world on paper: the top Ivy league graduates, PhD’s, and highest IQ’s in the world. They actually met with Warren Buffett and Charlie Munger to pitch for funding. Buffett and Charlie promptly declined them because they could sense how unsound their strategy was.
They made a lot of money with debt and math. But was a tiny, tiny chance that if the market moved severely against them, they’d lose it all and collapse the economy. They worry about that chance because it was so small.
All their IQ and complex math models didn’t help them much because that tiny chance event happened. They went bankrupt and almost took down the world economy.
James Altucher, a well-known podcaster, has written about how he made tens of millions, put it all into a flashy new industry, tech stocks, and lost it all over the course of a year. It scarred him for years because he couldn’t pay for his parent’s medical bills and had to move to the poorest part of his area. He got overconfident with how great he was. He thought if he could make that much money, he could get really good at another area, technology, quickly.
A key part of emotional intelligence is becoming aware of your emotions. I tend to dwell on negative things of the past like how James let his failure haunt him for years. But the past can’t be changed. Move on. Bounce back. Make the future great, don’t let your past drag you down. The first step is becoming aware of yourself.
You can learn a lot just from observing others. By doing so, you can avoid the same mistakes and heartache.
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