On Wall Street, Pride Signals a Fall

Hubris in action.

Hubris is defined as excessive self-confidence by the Old English Dictionary. Most would agree, hubris isn't an attribute anyone should strive to posess. Not surprisingly though, we see it in many successful people, especially in the business world. Not only hubris, but hubris that leads to an eventual fall. This makes sense. If you are doing well, if you are successful, then it is natural to feel confident in yourself. As you reach success, you become overconfident in your abilities and begin to fall. As the saying goes, the bigger they are, the harder they fall.

Take for example a study in the magazine, The Speculator, conducted by Victor Niederhoffer and Laurel Kenner. Using companies featured on the front cover of Forbes as their variables, they conducted an experiment to see how a company's performance in the stock market would be affected by their appearance on Forbes. Every company featured on the cover from 1997 to the present were studied. The trend was that companies would perform an average of five percentage points worse than the market in the month following their Forbes cover and in line with the market for five months after that.

"...companies perform worse than the market in the month after appearing on the cover of Forbes."

What does this mean? Simply put, companies who experience hubris also experience a fall. This doesn't simply apply to business though. We can see this in tragedy as well, more specifically, in Oedipus Rex. In the beginning of the play, we see Oedipus as the hero of Thebes, and he knows it. He acts as the end-all, be-all of the city, the supreme power. He truly thinks of himself in the highest regard and lets everyone else know as well. He deserves it too. He did save the city of Thebes from the Sphinx after all. This confidence, however, is partly to blame for his fall. Thus, we see that it is not only people in the business world that are hurt by hubris, but tragic heroes as well. Heroes who have hubris fall, but usually in a much more dramatic fashion