Mental Models The Psychology of Money
The Psychology Of Money Introduction
Getting wealthy might have little to do with how smart you are but if you can change your behaviour to get wealthy. It’s hard for really smart people as well.
There will never be a janitor outperforming a Neuroscientist in brain science. However, financial, these things can happen in investing.
Financial success is a soft skill, it is more about the behaviours one develops than what you know.
Know what to do comes very less handy when you are trying to do the thing in the present situation when faced with the problem.
No One’s Crazy
What you experience is much more compelling than what you learn second hand.
John F Kennedy, as he was wealthy, didn’t know much about the Great Depression in the states, still was put in charge to lead the country. Most likely due to his experience in WW2.
The Major challenge is that no amount of reading or studying can recreate the power of fear or uncertainty. Until you fell the consequence having lived through the situation, you may not understand it enough to change your behaviour.
When there is inflation, recession, W or any other circumstance, the viewpoint of the individual financially changes to suite the circumstance. So people with varied backgrounds, culture, circumstance might think very differently(or crazily) about finance that people on the other side. Factors such as age, year, locality etc also matters.
Few people make decisions on a spreadsheet, they make them at dinner table according to their priorities, emotional factor, personal history, worldview, marketing etc.
Money conceptually is very new, and we are all newbies to it in grand scheme of things.
Luck and Risk