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If you have read a few of my previous writings, you would have already known the fact that I am pretty impressed by the book, The Psychology of Money by Morgan Housel.
This is the book that I would recommend to each and every one. The book is so well written and the fact that the author has got all real-life examples for every point he tried to convey is mind-blowing.
That research and dedication make something of a masterpiece.
So, here all I am doing is adding my two cents.
Morgan has a ton of good points, but one came to be surprisingly true for me.
This is where the author about how no one’s crazy!
In simple words, Why do people have different approaches towards life and money, and how they are all right in their own way?
Morgan used a phrase that somewhat goes like, our personal experience with money is a fraction of what really happens in this world whereas we think, our way is almost the exact way how the world and money work!
And genuinely this is exactly how we feel.
We feel that we are always correct since we are using all our given senses and information at hand to take the most accurate decision with our money.
And.
Although this has some truth in it, majorly, the reality is something else.
A study was done on how people behave with their money.
And it has been found that most of the time, people’s behavior gets influenced by what they have experienced over their lifetime.
On how they feel about money.
People might think that they are data-oriented and pretty much rational but it is just human emotions and experiences.
And that’s why we all are right from our perspective.
We are all different human beings with an extremely different life.
Different ages, different education, different place, different family with all different values and stories, and it all matters.
Look, for you today, what is just a norm, might feel weird to another one.
Let me give you an example.
Let’s talk about 2008. It was one of the most devasting financial years and people not only lost fortunes but also lost lives.
People on Wall Street saw the darkest days when everything came down like a mere house of cards.
Now, let’s say, a person who was in his 50s or 60s and has been saving and investing in the stock market, just so that he can finally give his/her family the financial freedom they have been waiting for.
Think about what happened when he/she got to know one fine morning in 2008 that more than 50% of their hard-earned money just vanished in thin air.
No, we can’t imagine, we just can’t feel the emotion. Because we never took those scars. Only those who lived through it can feel it.
All we could say is that it must have been devastating for him/her. Whereas for his/her family. They were on the brink of collapse.
And let me ask you if you would have been a member of that family and had been through that horrifying moment, would you have the same positive outlook towards investing in stocks?
Would you ever feel like giving your money to the market in hope that it will be safe?
Never!
Because of your experience. Because of your scars.
And at the same time, you might think that others who are blindly investing in the market are taking the biggest risk of their life.
Now, on the other hand, take another family made most of their fortune in the stock market
Then what do you what kind of outlook would a member of that family have towards investing in stocks?
They would just be super positive.
They might just make stocks their main investment vehicle, because of how stocks made them feel in past.
Because of how investing in stocks, made them rich and happy.
So, for the same market, two different person can exact have an opposite view. Only because of their circumstances.
No data, no history, no books, but real experience shapes us.
That is the reason why you just can’t call any of these people Crazy, cause they have their own scars and medals to prove.
This goes for every one of us. We take steps based on what we have been through. And since Money has been around for a long time, we all have our share of experiences.
Thus remember the fact, it might be rational to you but that doesn’t mean it is how things work on a large scale.
And this is what makes the subject of money and finance so difficult.
Remember, no one’s crazy!
Also, thanks for taking the time to engage with my content. Really appreciate it.
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