AI Summary #
The host discusses the limitations and pitfalls of relying on others for financial advice, particularly when it comes to individualized solutions that cater to diverse goals, personalities, and backgrounds. The key takeaways are:
- No one-size-fits-all approach works in finance; instead, individuals need to ask themselves questions to develop a personalized approach.
- The host acknowledges that some people may be articulate or persuasive but not necessarily right, highlighting the importance of critical thinking and questioning assumptions.
Some notable quotes include:
- “Every job looks easy when you’re not the one doing it.”
- “Nothing is more persuasive than what you have experienced firsthand.”
The host also explores various thought-provoking questions to help listeners think differently about finance, business, and money, such as:
- What experiences may be influencing your views but are unclear?
- How might your views change if you had a different background or generation?
- What do you think is true that might actually be influenced by good marketing?
- What problems are you ignoring due to their painful nature?
Actionable advice includes:
- Embracing self-reflection and critical thinking to develop personalized financial approaches.
- Recognizing the limitations of relying on others for advice and questioning assumptions.
- Being open to revising one’s views based on new information or different perspectives.
The host concludes by emphasizing the importance of considering alternative histories, personalities, and views that might have influenced your current perspective. By acknowledging the role of chance and external factors in shaping our lives, we can gain a deeper understanding of ourselves and develop a more nuanced approach to finance and decision-making.
AI Transcription #
Welcome back.
What are the biggest problems in finance?
Is that everybody is so different.
Different goals, different personalities, different emotions, different backgrounds, different social aspirations.
And we take that big, eclectic mix of people and so much of the financial media and financial advice is trying to give a one size fits all solution to something in which everyone is going to actually come up with a different answer.
They have different needs.
And that’s part of my idea that the majority of financial debates, when people debate about how should you spend your money, how should you invest your money, how does this work, where is this going?
They’re not actually people debating with each other.
They are people with different backgrounds, different time horizons, different risk tolerances talking over each other.
And so what I want to do in this episode is not give you any answers or even really any opinions about any topics.
I just want to ask you some questions because I think the way that you figure out what is right for you and what you’re missing in finance and what you can improve on is not to go out and ask people for answers is to ask yourself some questions and come up with an individualized approach that works for you.
So I think about these questions all the time in my own life.
And truth be told, I think there are some of these questions that you cannot answer.
At least you cannot answer them honestly.
But they are thought provoking, I hope, thought provoking questions that will help you think about the world and business and money in a different way.
Alright, here we go.
Who has the right answers?
But I ignore because they are not articulate.
That one always gets me thinking because obviously what gets people’s attention is a person who’s making the most noise, often the person who is the most controversial, or even who is just telling the best story.
The best story always wins.
But being articulate or being a good storyteller is not the same as having the right answers.
And so I think about this all the time for people who have influenced my investing beliefs, my money beliefs, or I could even say my political beliefs, my social beliefs.
How much of that have I been influenced by because it’s true versus just it sounds good and it makes sense?
Alright, next one.
What have I experienced firsthand that leaves me naive to how something works?
As former GE CEO Jeff ML once said, every job looks easy when you’re not the one doing it.
And so I often think the things that I complained about in the world, oh that person’s not doing a good job, oh that person screwed up, oh look at that idiot over there.
How much of those criticisms would I realize were unfair if I were the one in their situation dealing with their emotions, dealing with their incentives, probably a lot.
Every job looks easy when you’re not the one doing it.
Alright, next one.
Which of my current views would I disagree with if I were born in a different country or a different generation?
The honest answer is oh, a, I don’t know, but b, a lot of them.
And this is why you get so many generational differences between parents and their children or their grandparents where you look at what another generation is doing and you just shake your head in confusion or disgust.
Because what they experienced both socially and economically and politically are so different than what you and I have experienced if you’re from a different generation.
And as I like to say, nothing is more persuasive than what you have experienced firsthand.
Alright, next one.
How do I desperately want to be true?
So much that I think it’s true when it’s clearly not.
This is a, this is a really difficult one to swallow because I think for a lot of people you’re willing this to accept something as true is calibrated by how much you need it to be true or how much you just desperately want it to be true.
And so when you’re thinking about how good are you at this task?
How much do people admire you?
How much do people like you?
Those kind of topics you’re going to cling to information most likely, I think, that influences how much you want those things to be true.
Alright, next one.
What is a problem that I think only applies to other countries or industries or careers that will eventually hit me?
It’s so common when you see something terrible happen to another country or somebody else’s job.
It is comforting to think, well, that happened to them, but me, not, that couldn’t happen to me.
That happens to other people, not me, not my country, not my field, not my career.
But of course, if it happened to other people, of course it could happen to you.
Maybe some people are more susceptible to bad events than others, same for countries and businesses, but nobody is immune from the ability of the world to humble you once in a while.
And so when you see a whole company going bankrupt, a whole industry falling into irrelevance, a whole country kind of breaking down socially, of course it could happen to you.
And so what do I look around and say, well, those poor unfortunate people?
And I kind of shake my head and it’s very external.
It feels like an out of body experience.
Like, oh, that happens to them, but not me.
Well, some of those might happen to me and you eventually as well.
Alright, next one.
What do I think is true, but is actually just good marketing?
Marketing is so, so powerful, so effective.
That’s why it exists.
That’s why we spend hundreds of billions of dollars a year doing it.
And how much of that am I influenced by?
Are you influenced by something that you think, oh, you found this great product, this thing that works, but actually what you are experiencing is the psychological influence of some very clever people sitting in a boardroom on Madison Avenue, pulling the merry andette strings of your mind, of your psychology, and it working.
Alright, next one.
What has been true for decades that will stop working?
But will drag along, stubborn adherence because it has such a long track record of success?
So many things in investing worked for decades until they didn’t.
And it really hurt a lot of people’s careers because they had so much historical data saying oh, investing this way works economically, this has always been true.
And they’re right without accepting that the world changes.
And even things that have lasted for decades, generations have and always will eventually change.
Alright, next one.
Who do I think is smart, but is actually full of it?
Like who is very persuasive to me?
And I think, oh, that person’s a genius.
They’re so clever, they’re so wise, they’re so intelligent, but they’re actually just very good at getting people’s attention.
Or they’re saying things that I want to be true, and that sound good, but are actually very incomplete, if not completely wrong, given how the world works.
Next one.
What do I ignore because it is too painful to accept?
Some of them I just sweeping under the rug and saying, I just want to compartmentalize that.
I don’t even want to think about that.
This is one of those things that again, by definition, you cannot answer that question because you’re not accepting it.
It’s lodged in the attic of your brain and you’re just ignoring it.
It’s collecting dust, but it’s true.
And maybe it’ll eventually catch up with you.
Next one.
How in my views change if I had 10,000 years of good apples to apples data on things that currently I only have recent history to study?
This I think a lot about with economic and investing data, where realistically we have less than a century of data to study what has happened.
And because of that, we only have, you know, a dozen or so recessions to study.
Well, how do we think that we know a lot about recessions?
How long they can last?
How bad they can get when really have 12 of them to study realistically in the United States at least?
If you had a magic wand, you would want thousands of them to study to really wrap your head around what they can do and how bad they can get.
How long they can last, but we don’t.
And so what would we think about the world, about politics, about money, about wars, all these things?
If the data going back thousands of years was apples to apples and we can study our current world with much more depth than we actually can today.
Next one.
Which of my current views would change if my incentives were different?
This again, I have no idea.
You can’t answer that question honestly at least, but the answer is a lot.
I think a lot of people when they criticize the decisions of other people saying, how could you be that greedy?
How could you be that dumb?
They underestimate that the boundaries of your morality might change if your incentives were different.
It’s very easy for a lot of people when they are in the situation under the influence of certain incentives to change and do things that they otherwise would have never considered.
Move along.
What are we ignoring today that will seem shockingly obvious in a year?
Or five years or ten years?
You can’t.
You cannot answer that question because if you knew what the answer to that question would be, you would not be ignoring it today.
But there are always these things where we look back.
Sometimes one year later, sometimes a generation later and say, what the heck were we thinking?
How could anybody believe that was true?
And we do this over and over and over again.
Anything makes sense with hindsight.
What events very nearly happened that would have fundamentally changed the world I know if they had occurred?
What are the terrorist attacks that almost happened but didn’t?
The world wars that almost happened, but we avoided.
The calamitous recessions that very nearly occurred, but we avoided to skirt.
In keeping on going down the list of all these things that could have happened, even in your personal life, what events in my personal life, whether it be jobs I could have taken, relationships I could have had, whatever it might be, but they didn’t occur.
But if they did occur, would completely change how I think about the world today.
It could be an endless list of these alternative histories and then alternative personalities, alternative views that you yourself and I myself would have had.
How much of things outside of my control contributed to things that I take credit for?
That’s another, that’s a tough one to accept, right?
Things that I and you look in the mirror and say, I did a good job on this.
I worked really hard and I deserve this success, whatever it might be, financially, personally doesn’t matter what it is.
That actually, if you had the crystal ball and you could have seen all the different ways your life played out, you would actually realize that that was a stroke of dumb luck that was outside of your control.
And it’s good that you have this, maybe you’re proud that you have this, but you realize if you could actually see all the different ways the world could have worked out, that this thing you take credit for was much more outside of your control than you think.
Alright, last one, maybe the most important.
Who do I look up to that is secretly miserable?
Who do I admire and I say, I wish I could be more like that person.
They seem to have a great life.
I should try to mirror what they’re doing, but actually if I could get inside of their head, I would see that they are much less happy than I imagined or even they are miserable.
This is a powerful one because most people, including me, I’m sure, only advertise, by and large, the good parts of their life.
And the bad parts of their life, they maybe only share with their close friends and family if that.
And if you really understood what was going on inside people’s lives, inside people’s heads and got the full view, not just the parts that they advertise, whether that’s their house or their car or their career or how clever they are on Twitter or whatever it might be, you realize that there is a lot going on and you’re only viewing a small sliver of what is going on in their life.
That’s it for this episode.
Trying something new here, this episode is brought to you by the two books that I have written, the psychology of money and same as ever.
There are obviously two of the most important things that I’ve done in my career.
And if you or anyone you know or maybe your clients are interested in a bulk order of those books, of either of those books, maybe more than 20 or 25 copies, shoot an email to books at longtermwords.com.
There’s some great discounts available if you’re interested in those.
And we’ll see you next time.