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Common Causes of Very Bad Decisions by Morgan Housel
10-12-2020, 03:26 PM
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#1
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gone traveling
Join Date: Sep 2015
Posts: 105
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Common Causes of Very Bad Decisions by Morgan Housel
Morgan Housel regularly serves up brilliant insights in his writings. I thought his blog post from October 1st entitled, Common Causes of Very Bad Decisions, was particularly insightful. See the link below.
Here's one cause of bad decisions that's really worth remembering.
"Being influenced by the actions of people who are playing a different game than you are. The idea that advice can be good for one person and terrible for another is rarely obvious. Taking your cues and advice from people with different goals, abilities, and desires than you is an easy road to misery. But it’s common, because smart people you look up to tell you it’s good advice. The number of things that are true for everyone in finance is small; everything else is just figuring out how much risk you want to take and what you want out of life, which is different for everyone."
https://www.collaborativefund.com/blog/bad-decisions/
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10-13-2020, 02:55 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,720
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Quite an article, with much to think about.
"Tribal instincts reduce the ability to challenge bad ideas because no one wants to get kicked out of the tribe. Tribes are everywhere – countries, states, parties, companies, industries, departments, investment styles, economic philosophies, religions, families, schools, majors, credentials. Everyone loves their tribe because there’s comfort in knowing other people who understand your background and share your goals. But tribes have their own rules, beliefs, and ideas. Some of them are terrible. But they remain supported because no one wants to argue with a tribe that’s become part of their identity. So people either willingly nod along with bad ideas, or become blinded by tribal loyalty to how bad the ideas are to begin with."
We find groups to support our uniqueness and lose some part of it at the same time.
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10-13-2020, 04:49 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Oct 2014
Posts: 1,544
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Quote:
Originally Posted by target2019
Quite an article, with much to think about.
"Tribal instincts reduce the ability to challenge bad ideas because no one wants to get kicked out of the tribe. Tribes are everywhere – countries, states, parties, companies, industries, departments, investment styles, economic philosophies, religions, families, schools, majors, credentials. Everyone loves their tribe because there’s comfort in knowing other people who understand your background and share your goals. But tribes have their own rules, beliefs, and ideas. Some of them are terrible. But they remain supported because no one wants to argue with a tribe that’s become part of their identity. So people either willingly nod along with bad ideas, or become blinded by tribal loyalty to how bad the ideas are to begin with."
We find groups to support our uniqueness and lose some part of it at the same time.
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Tribalism NEVER happens on ER.org. LOL
__________________
-Big Dawg-FI since 9/2010. Failed ER in 2015. 2/15/2023=DONE! "Blow that dough"-Robbie
" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
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10-15-2020, 07:53 PM
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#4
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gone traveling
Join Date: Aug 2020
Posts: 682
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Quote:
Originally Posted by AtlasShrugged
Morgan Housel regularly serves up brilliant insights in his writings. I thought his blog post from October 1st entitled, Common Causes of Very Bad Decisions, was particularly insightful. See the link below.
Here's one cause of bad decisions that's really worth remembering.
"Being influenced by the actions of people who are playing a different game than you are. The idea that advice can be good for one person and terrible for another is rarely obvious. Taking your cues and advice from people with different goals, abilities, and desires than you is an easy road to misery. But it’s common, because smart people you look up to tell you it’s good advice. The number of things that are true for everyone in finance is small; everything else is just figuring out how much risk you want to take and what you want out of life, which is different for everyone."
https://www.collaborativefund.com/blog/bad-decisions/
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This rampant on bogleheads. The advice from long time posters on that site comes from a perspective of 70 and 80 year olds, advising 30 year olds on "what I would do".
A 30 year old should not do what an 80 year old would do, financially speaking.
Nothing wrong with being 70 or 80. I hope to achieve that some day, God willing. Financial actions and strategies for people on that site, and probably this one, are vastly different because of different situations and goals.
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10-15-2020, 10:37 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Mar 2007
Posts: 1,860
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What I see more often is that people take advice from the wrong source. I have relatives that have told me...
"I don't want to work overtime because it will put me in a higher tax bracket and I'll actually make less money."
I asked them where they heard that, and they said the "guy on the assembly line" told them that.
If you're going to take advice, take it from someone who has done well in that area.
__________________
"Live every day as if it were your last, and one day you'll be right" - unknown
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10-15-2020, 10:41 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,094
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__________________
Fortune favors the prepared mind. ... Louis Pasteur
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10-16-2020, 04:10 AM
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#7
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gone traveling
Join Date: Sep 2015
Posts: 105
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Quote:
Originally Posted by chassis
This rampant on bogleheads. The advice from long time posters on that site comes from a perspective of 70 and 80 year olds, advising 30 year olds on "what I would do".
A 30 year old should not do what an 80 year old would do, financially speaking.
Nothing wrong with being 70 or 80. I hope to achieve that some day, God willing. Financial actions and strategies for people on that site, and probably this one, are vastly different because of different situations and goals.
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You are absolutely correct. I was motivated to post Morgan's article here because one-size-fits-all thinking is so prevalent on the bogleheads. It's extremely dangerous. People need to think and act based on their own financial situation, goals, and risk tolerance. It's wise to avoid group think and the online mob.
Morgan has a way of making this point more eloquently than most.
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10-16-2020, 04:58 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Nov 2008
Posts: 3,408
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Years ago I considered the postings from select long time members that I had come to respect as a way to educate myself since I had no background in personal finances. This went on for a few years of reading thousands of their recent and historical posts. I also read a few books that were well respected until I felt comfortable to make financial decisions that were appropriate for me. I also gained enough knowledge to know what posts to ignore although appreciated the debates.
My decisions on investing may not be a good plan for others but it has worked exceptionally well for me.
Cheers!
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10-16-2020, 05:28 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Mar 2009
Posts: 2,985
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For years I have used this site for ideas and perspectives to investigate. Lots of good points made but you've got to figure it out for yourself. I believe a great majority here do exactly that.
__________________
Took SS at 62 and hope I live long enough to regret the decision.
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10-16-2020, 06:08 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,720
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Quote:
Originally Posted by Bigdawg
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It happens everywhere I'm afraid to say. May even happen in your home...
The article really is quite a find. I hope more read it and comment.
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10-16-2020, 06:36 AM
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#11
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Recycles dryer sheets
Join Date: Sep 2016
Posts: 150
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Quote:
Originally Posted by Finance Dave
What I see more often is that people take advice from the wrong source. I have relatives that have told me...
"I don't want to work overtime because it will put me in a higher tax bracket and I'll actually make less money."
I asked them where they heard that, and they said the "guy on the assembly line" told them that.
If you're going to take advice, take it from someone who has done well in that area.
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DW worked for the state and had a great pension plan. Coworkers told her she’s crazy to stay working because she was maxed out on time that contributed to her pension amount. I had to remind her time and again not to listen to those folks as we were working to fill our coffers.
It was a struggle.
I can’t tell you how many times she’s told me one of her coworkers that retired had to go back to work because they didn’t have enough money.
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10-16-2020, 08:47 AM
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#12
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Recycles dryer sheets
Join Date: May 2019
Posts: 318
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Great read - the 2 most important points were the 2 already mentioned here - tribalism and listening to people playing a different game than you. It is so true, but I had never really thought about it that succinctly before.
Early on I listened to others even if they weren't playing the same game - later in life I learned to discern if what others said made sense for me or not. Great advice for all people, but should be taught in high school.
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10-16-2020, 04:15 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,720
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Ask not what your tribe can do for you...
Tribal has its place during formative years I think. For example religious schooling was more effective than public schools, at least where I grew up. But 12 years in any tribe is a long time.
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10-16-2020, 05:09 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Oct 2014
Posts: 1,544
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Quote:
Originally Posted by target2019
But 12 years in any tribe is a long time.
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So you'll be leaving ER.org in December?
__________________
-Big Dawg-FI since 9/2010. Failed ER in 2015. 2/15/2023=DONE! "Blow that dough"-Robbie
" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
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10-16-2020, 05:19 PM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2014
Location: Huntsville, AL/Helen, GA
Posts: 6,002
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I was talking to my wife this morning about how our daughter at 33 continues to make incredibly poor life decisions. She remains unemployed, on ankle express and she's a full time couch surfer.
"people with different goals, abilities, and desires". What about people that have no goals or desires to do better and they ignore their natural abilities? That's where we're at with her.
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10-16-2020, 05:42 PM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2017
Location: City
Posts: 10,351
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Humans are bred to seek tribal membership. It is a very strong survival skill. We constantly, mostly subconsciously, strive to belong to as many tribes as we can.
When you look for it, you can see how ubiquitous it is. The tribe of people with a little horse on their shirts. The tribe of people with a particular design on their shoes. The tribes who support particular sports teams. The opera people. The dog show people. The tweedy-uniformed academics. The tribes of people differentiated by their spoken languages. And religious tribes, of course. I can't even guess how many tribes, major and minor, that the primitive sections of my brain think we belong to.
A place where tribalism is a major factor is discrimination. Early waves of immigrants to the US were discriminated against for a couple of generations until their language and accents no longer made them easy to identify -- physically they aren't very differentiated, though last names are still somewhat useful. African slaves and more recent waves of immigrants (Somali, Hmong, etc.) are differentiated also by color, so they are easier to look at and say "not my tribe." It's baked into our genes and socialization can never change that fact. Not joking, IMO this will continue until interbreeding causes all the kids to be more or less the same color. (BTW Porky, this is genetics not politics.)
__________________
Ignoramus et ignorabimus
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10-16-2020, 08:29 PM
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#17
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Full time employment: Posting here.
Join Date: Aug 2019
Posts: 691
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Dan Kahan has done some interesting research on how "smarter" (more numerate) people don't necessarily make better decisions. They are better at rationalizing a decision when it puts them in their desired group. I find his talks very interesting, but you have to be a motivated watcher (they are a bit academic)...the first one I saw was in person. Here he is on TEDx
A classic on bad decision making is "The Logic of Failure" by Dietrich Dorner
__________________
--At what age does spending less now in order to have more later stop making sense?
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10-17-2020, 08:58 AM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,720
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Quote:
Originally Posted by Bigdawg
So you'll be leaving ER.org in December?
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Any time is possible I guess.
The 12-year reference was to religious school upbringing, but it could apply to any group of zealots.
Please fill in <yourTribe> here.
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10-17-2020, 09:06 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 4,373
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Reminds me of one of those satire motivational posters:
"None of us is dumb as all of us"
__________________
The problem isn't artificial intelligence, it's natural stupidity.
You can't spend yourself to prosperity.
Semi-Retired 7/1/16: working part-time (60%) for now [4/24/17 changed to 80%]
Retired Aug 2, 2017; age 53
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10-17-2020, 09:38 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,720
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Quote:
Originally Posted by SnowballCamper
Dan Kahan has done some interesting research on how "smarter" (more numerate) people don't necessarily make better decisions. They are better at rationalizing a decision when it puts them in their desired group. I find his talks very interesting, but you have to be a motivated watcher (they are a bit academic)...the first one I saw was in person. Here he is on TEDx
A classic on bad decision making is "The Logic of Failure" by Dietrich Dorner
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Here is a link to Scientific American article by Dan Kahan on same subject.
https://blogs.scientificamerican.com...-before-truth/
It's on my list of to-read articles now.
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