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Confidence breeds confidence. A cliché, I know, but that doesn’t make it untrue. Trusting in someone else, one’s own ability, or the strength of the market, gives you the assurance to be a winner.

Commentaries on the economy, the stock market or the state of the venture capital industry frequently include phrases like, ‘confidence returned’ or ‘confidence waned’ as a reflection of what is happening. It’s recognised as an important factor in performance or in predicting future performance. 3i organise a quarterly survey measuring the confidence of entrepreneurs in the business and economic climate, regarding movements in the measurement as a predictor of GDP.

While preparing to make a speech the other day, I reflected on how important self-assurance was in so many aspects of what we do, not just in macro terms but also at the micro level.

Take public speaking
This is one of the most feared aspects of any executive’s job. Yet people who are experts at it just stand up, often with no notes, deliver their speech with aplomb and without any apparent sign of nerves or need for alcohol.

You could say this is just a matter of practice, but it comes from more than that – confidence is the key. But this in turn comes from something else – in most cases the knowledge that one has prepared one’s subject matter really well and understands it. A perfect speech can flow from this.

Smelling winners – or losers
In business, confidence translates into the broader context of morale. You can almost smell a company that is doing well, or a salesman who is on a winning streak. People who are winning expect to succeed – this is apparent to prospective customers or potential new hires. It’s a strong, positive vibe.

Now, this is all very well, but what happens when the converse occurs? You are always getting shortlisted but you don’t win. This is the time when strong leaders really come in to their own. You know your spirits are low, but also that you can’t show it – you have to give off that confident vibe.

Turn self-doubt into self-belief
First of all, don’t post-mortem your defeat with your colleagues when it has just happened. Go away, think about it and, above all, put it in into context. It’s never the end of the world.
Secondly, remember your successes. Remember that last time you got kicked in the teeth – and how you then bounced back.

Last but not least, really analyse where you went wrong. Sometimes it’s just bad luck but often you just didn’t read the situation properly. I remember the very first company I invested in when I started Elderstreet – it went spectacularly bust in just six months. It hung over me like a dark cloud for weeks but I learnt some really valuable principles that I have never forgotten. I have made other mistakes since then, but never the same ones twice. I now look back and say in many respects this was the best lesson of my life.

Let’s talk about over-confidence
In business this is often the most dangerous characteristic for a senior executive to have – and it is never an attractive character trait.

How many times have we seen people with some initial success behind them go on to make a series of disastrous decisions driven purely by ego?

The internet days were a case in point for investors and venture capitalists. From 1995 to 1999, it seemed that any company you backed in the technology space was a winner. It never occurred to us that this was market-driven; no, we believed it was our good judgement, our skill, our ability to spot things that our stodgier, more conservative and of course backward-looking colleagues just didn’t get. We understood the new ‘paradigm’ shift and they didn’t.

So we all continued to pile in with more and more ridiculous, over-priced deals, introduced by ever more avaricious advisers and the result, as we know, was an absolute disaster.

Follow a contra-cyclical pattern
Public markets are an example where a lot of money has been made by reading them for what they are, not just for the prevailing mood.

So what leads some people to take a contra view and have the confidence to invest when everyone else is hanging back?

A shrewd investor friend once told me that when a leading market commentator said that fixed interest and property were the only place to invest and UK interest rates were at an all-time low of 3.5 per cent, he just knew it was the time to invest in equities. He did and he made a fortune!

And what are my future predictions? I am confident that the markets will... Well, perhaps I’ll leave this for another day.

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