Experience does not always make you a better decision-maker

 

“In times of rapid change, experience could be your worst enemy.” - J. Paul Getty

Most people believe that more experience is better than less experience. Hire the older portfolio manager or trader and you will do better. This has strong logic and makes sense; however, experience can be harmful if you learn the wrong lessons, or the lessons of the past do not apply to the future.

Experience depends on the learning environment and how you learn. If the past repeats itself, then experience matters because you will see the same problem with the same answer. A static world is good for the experienced manager. On the other hand, if the link with the past changes, then experience will work against the manager.  What worked in the past may not apply in the new environment. Learning from the past will be a hinderance and the less experienced manager may do better.

If experience supports how to deal with change, then it is helpful. If experience wants to replicate the past to find answers, it will fail and create bigger problems.