What Is Hubris?

Hubris is excessive confidence or arrogance that makes people think they can do no wrong. Hubris creates excessive pride, a character’s fault. In finance, humility is a risky trait that encourages investing professionals to take unnecessary risks. Such risks can pay off financially, but someone with such behavioral defects might lose everything in a flash. Hubris can lead to shortsighted, illogical, or dangerous action because the person does not regard others’ opinions or effects. Hubris often humiliates its target.

How Hubris Works

Most successful people use significant thinking and execution—those with arrogance plunge into situations without examining their ways. Poor processing and planning frequently lead to failure.

Success may lead to Hubris. Executives and traders with arrogance might become a burden for their companies. Managers and traders may make choices without considering the repercussions or take on undue risk. Hubris often leads to its downfall.

Successful CEOs and commercial leaders with arrogance may struggle in team environments. When viewpoints collide with theirs, they don’t consider them. They’re inconsiderate because they think they know best.

Bad for Investment

Investor and trader arrogance may be harmful. Many investors are overconfident and assume they know more than professionals or the market. Intelligence and education don’t exclude you from getting solid, independent counsel. It doesn’t imply you can outsmart pros and sophisticated markets, either. Many investors have lost money by believing they were superior to others.

Overconfidence in 1) information quality and 2) the capacity to act at the proper time for the most significant reward can lead to humiliation. Research indicates that overconfident traders trade more often and neglect portfolio diversification.

One study examined 10,000 discount brokerage deals. The study investigated whether frequent trading increased returns. The analysis indicated that acquired stocks underperformed sold equities by 5% over one year and 8.6% over two years after excluding  tax-loss transactions and others for liquidity purposes. Thus, retail investors who are more engaged earn less money.

Multiple marketplaces performed this study with the same results. They determined dealers are “basically paying fees to lose money.”

Differentiating arrogance from confidence is crucial. Hubris is harmful, yet reasonable self-confidence is essential to long-term success.

Vanity vs. Self-Assurance

Some confuse Hubris and self-confidence, although they are distinct. Some say Hubri breeds self-confidence, and that’s true. Self-confidence does not always lead to arrogance.

Hubris is arrogant, which is a crucial difference. They think they can’t fail because they’re too skilled or lucky. Self-confident people feel they have abilities or luck, but evidence supports it. Unlike Hubris, they recognize danger and hardship.

Self-confidence often accompanies humility. CEOs and anybody else can benefit from humility since it can curb arrogance and reveal a person’s strengths, weaknesses, and triumphs more clearly than Hubris.

Special Considerations

Defying arrogance is essential to maintaining professional connections. Books and self-help manuals can help you overcome arrogance.

Consider how arrogance affects others to shift mental patterns and make constructive adjustments. When working in a group, praise and credit can reduce humor.

Staying self-aware amid achievement is crucial. Remember that present successes do not preclude future challenges.

Literature Hubris Examples

Hubris is prevalent, but literature best illustrates it. A famous example of Hubris is in Mary Shelley’s Frankenstein. Victor is the main character. Victor’s ambition to be the best scientist shows his vanity. Hubris ends in disaster.

In Jane Austen’s Pride and Prejudice, Mr. Darcy displays excessive self-confidence and pleasure in his social standing. His Hubris causes him to misjudge his future love, Elizabeth, nearly losing her. After transforming himself, Mr. Darcy overcomes his Hubris and wins Elizabeth’s love.

In reality, there have been several examples of technically outstanding professors and researchers in finance at top colleges. Their supposed expertise and intellect might fool individuals into believing the actual world is easy.

Some excel, but others are surprised outside the ivory tower. Oddly, a Ph.D. in finance may take you in the wrong direction, while a high school graduate may have excellent market sense and make a fortune.

Investment Hubris Examples

The legendary Nick Leeson affair is a prime illustration of arrogance in investment. Nick was Barings Bank’s Singapore-based lead derivatives trader. Nick was assigned to arbitrage trading for the bank and given a powerful position without scrutiny due to his prior achievements.

To hedge losses, such deals require betting on both sides. Nick only gambled on one side of arbitrage trading in the markets he was involved in since he felt he knew everything.

He risked huge losses by doing so. Losses led to Nick’s imprisonment and Barings Bank’s bankruptcy.

Enron Corp. felt they could deceive investors and authorities by hiding their financials using clever accounting procedures. Upon disclosure of the company’s financial condition, the shares plummeted from over $90 to just over $0.25.

How Are Arrogance and Hubris Different?

The two are synonymous and closely similar. Arrogance is excessive pride in being superior to others, whereas humility is strong self-confidence in one’s talents and may have nothing to do with others.

What Is Personal Hubris?

Hubris, “excessive pride or self-confidence,” is most frequent in people who think they can achieve something they can’t. Hubris and arrogance are similar, but Hubris is more about solid self-confidence in one’s talents.

An Example of Hubris?

In real life, Hubris can be a CEO who thinks they can’t fail. They produced one excellent product: a lawyer who thinks they can’t lose a case or a doctor who doesn’t listen to patients because they think they know everything. Greek mythology’s Icarus exemplifies arrogance. After flying too close to the sun, Icarus’ wings melted, and he crashed to the ground.

Positive or Negative Hubris?

Hubris is bad. Hubris makes people appear arrogant and out of touch.

Greek Mythology: Who Was Hubris?

Hubris was originally “Hybris,” but it altered over time. The Greek goddess Hybris embodied audacity, humor, violence, reckless pride, and arrogance.

The Verdict

Many influential individuals think they can’t fail because of their prior triumphs. This thinking nearly always leads to their demise and has impacted many commercial and political leaders.

Conclusion

• Hubris—excessive self-confidence—can lead to self-deception and dangerous behavior.
• Due to their status, successful people frequently have hubris.
• All-consuming arrogance often leads to ruin.
• Practical methods and self-awareness may help overcome arrogance.
• Evaluation and implementation of humility should be frequent to combat arrogance.