Warren Buffett has made $117 billion by investing wisely.

This was the reason a lady in the audience at one of his talks asked his advice.

She’d just come into a few thousand dollars and wanted to know the best way to invest it.

Without hesitating, Buffett said “Pay off your credit card debt”.

She looked disappointed, that wasn’t the answer she wanted, she wanted an investment tip that would make her rich.

So Buffett explained, “You’re paying about 18% interest on your credit card debt. There isn’t any safe investment that’s going to give you an 18% return. The most you’ll get is probably around 4% or 5%. So it doesn’t make any sense to put your money into a 5% investment while you’re losing 18% at the same time.

If you’re getting 5% interest but paying out 18% interest, you’re losing 13%.”

The woman sat down, sure Buffett made sense but it wasn’t the answer she wanted.

She wasn’t interested in paying what she owed, that was boring, she wanted to make money by investing, that was exciting.

Which is why Warren Buffett is a multi-billionaire and most of us aren’t.

He says he made his fortune not by making brilliant decisions, but just by avoiding stupid ones.

That’s a good example of what he means: he avoids the Optimism Bias.

This is the tendency to overestimate the upside and underestimate the downside.

This is what cognitive neuroscientist, Tali Short, says led to the financial downturn of 2008.

When the financial market’s desire to win against all reason, became an obsession.

William Muir, a biologist at Purdue university, conducted an experiment with chickens.

He separated them into two groups, those that laid a normal amount of eggs and those that laid many more eggs, which he called ‘super-chickens’.

After two generations, the normal chickens were producing more eggs, but only 3 of the ‘super-chickens’ were still alive, the rest had been pecked to death.

Muir’s conclusion was that extreme competition had actually been harmful.

Once the super-chickens had been removed from the group, the normal chickens were able to produce comfortably without being harassed.

The super-chickens meanwhile had attacked each other.

Margaret Heffernan, a professor at Bath university, sees this as an analogy for human behaviour in business, and how harmful internal competition can be.

In trying to win at all costs, highly competitive employees become fixated on personal success rather than group success.

In which case, the way to succeed is to harm the chances of your co-workers in order to make yourself look better by comparison.

Instead of supporting the group against outside competition, the focus becomes personal success by competing against those inside the group.

She cites football teams as an example, Real Madrid versus Barcelona for instance.

Real Madrid had ‘Los Galacticos’, the most expensive footballers on the planet, who each had to justify their enormous cost against everyone else on the team.

Whether the team won was less important than how well they personally played.

Whereas Barcelona had a team that played for each other, instead of competing with each other: they only won when the team won.

I’m sure we all know people who put more energy into the politics than they do into the job.

People who focus on their own success above everything else.

We can find it everywhere, no matter how gifted someone is, once the toxic personality is removed the whole team performs better.

And that’s the irony, in the end the wrong sort of competition is self-defeating.