Watch out, Washington, D.C.
The administration of President Donald Trump, as well as Beltway politics in general, may have fallen in the crosshairs of a relentless researcher and investigative journalist: Michael Lewis.
“I’m doing nothing but thinking about it,” Lewis said on Thursday while addressing the 2017 Morningstar Investment Conference in Chicago. “The story is even better than I thought.”
The early days of the Trump administration could end up receiving the same scrutiny Lewis gave Major League Baseball in his 2003 book Moneyball, traditional financial firms in 2010’s The Big Short and high-frequency traders in 2014’s Flash Boys.
Lewis said that Trump’s administration is struggling because of a lack of knowledge on the part of the president, his staff and his cabinet. Unlike previous administrations, who used the 75-day period between Election Day and Inauguration Day to learn about the functions of the executive branch and receive advice and assistance from the outgoing administration, Trump and his staff showed little interest in learning from their predecessors.
As a result, the new administration is learning on the job, said Lewis.
“It’s government by ignorance—maybe they’ll get up to speed, but who knows,” said Lewis. “It’s an incredible situation where institutional knowledge gets flushed down the toilet.”
Lewis’s latest book, The Undoing Project, details the friendship and work of Israeli psychologists Daniel Kahneman and Amos Tversky. While the pair are familiar to many financial advisors as pioneers of behavioral finance, Lewis says he was largely unaware of their research until someone pointed out that many of his books have strong behavioral finance connections.
Like Kahneman and Tversky before him, Lewis argued that advisors, and people in general, should rely more on methodical processes, like algorithms, to aid their judgment.
“Every good decision-making environment needs to recognize the power of algorithms, the power of good predictive data, and worship it, even, but not at the expense of stupidity,” Lewis said. “Think like a behavioral scientist. You have to understand the way your mind leads you astray when you start to let anecdotal information into the room.”