The Psychology Of Money

I recently purchased a book called The Psychology of Money.  Not just one book, but dozens of them, which I gave to clients.

It isn't the best finance book I've read, nor is it close to being the best behavioral book I've read.  But it is one of the better behavioral finance books I've read.

I'd summarize it this way -- The Psychology of Money explores the different ways people think about money, and how personal experiences with family, friends, and neighbors will often influence their financial behavior – for better or worse.

Put differently, if a person is around others who are (un)disciplined with money, they're more likely to be the same way.  That may not be a revelation, but it should also make one think about how the same philosophy can be applied to other things.

If you're consistently around people of a certain political view, you're more likely to share it.  Same for religion.  Same for social issues.

This makes it pretty simple to understand the formations of group-thinking a/k/a cultish behavior.  The lack of exposure to other views leave one to believe there are no alternatives.

I'm old enough to remember when the internet was supposed to solve all of this.  It made the world smaller and accessible, so presumably humans (with internet access) would be able to see humanity in a broader context.

Unfortunately, that idea has come crashing down under the weight of unregulated social media apps.  Now people just follow other people online who think the same way.  And let's face it, some of this people are ignorant and malevolent, increasing the likelihood their followers will be that or worse.

Which brings me back to the broader lesson of The Psychology of Money.  You learn what you live, which may or may not be a good thing.

The Critical Condition Of Critical Thinking

I've always sub-titled this blog "The random rants of a critical independent thinker."**  What does this critical thinker moniker mean to me?

First, I now realize it means I've been using an extra, unnecessary word for a lot of years, because true critical thinking is always independent.  It's should not be affected by race, gender, religious or political affiliation, or any pre-conceived notion that would alter one's perspective.

Critical thinking is actively assessing factual information, and then drawing a conclusion.  In other words, it's the opposite of most thinking today, in which people seek out information to support their already drawn conclusions (a/k/a confirmation bias).

Note that I said "factual" information.  Critical thinkers don't just assume everything they hear and read is true.  This is a real problem for most people today, who seem to swallow anything they hear from their neighbor, or read on the internet.  Critical thinkers not only question the rationality of the information, but also the reliability of the source providing it.

As for that sourcing, critical thinkers absorb information from a wide variety of people and places.  You can't call yourself a critical thinker if you only read the same, single newspaper / web site year-round.  Or watch the same broadcast network year-round.  Or talk to only people with the same background.

Based on that basic summary, it follows that I believe there's at least one other truth about critical thinkers:  These days, they are in short supply.

**Due to the second paragraph, as of today, it's "The random rants of a critical thinker."

Ruining A Great Invention

The internet, as we know it, has been around since roughly 1990.  It was only for sending and receiving text at first, but by the mid-to-late 1990s, the World Wide Web became available.  This allowed us to electronically visit places (web sites) with pictures and later videos, which we would ultimately be able to pass along to others.

With that brief history of the internet in mind, I would compare it to any of mankind’s greatest inventions.  It may not be quite up there with the alphabet or the automobile, but it’s at least in the conversation with the printing press.

Unfortunately, that conversation would have to include whether the internet is now used as much for evil as it is for good, thanks in part to the proliferation of Facebook / Twitter / social media.  I don’t just mean terrorist type evil, either.  I mean the little bits of evil, things like trolling and bullying, and lies that get passed along as fact and influence behavior in a negative way.

I’m not the most internet-connected person, yet not a day goes by that I don’t see a false or questionable internet-sourced item that’s presented as fact.  (This is particularly true in national political election years like this one.)  It happened to me today, it happened to me yesterday, it will surely happen to me tomorrow.

I’m usually skeptical enough to figure it out on my own (sometimes with the help of snopes.com) but let’s face it, most people swallow whatever they’re sent as the truth.  That wouldn’t be so bad, but in our instant gratification world, those fake-truth-swallowers not only agree with what they see, they also have to affirm it, often by sending it along to other fake-truth-swallowers.

Using the internet in this way this isn’t good for civilization, but short of another evil called censorship, there are no rules of engagement to keep it from happening.  That’s a shame, really, for one of the greatest inventions of all-time.

Golf 24/7

An historic event (or is it a historic event?) in my life occurred this week.  After many years of abstinence, I allowed myself to indulge in a long-waited, premium desire.

I got the Golf Channel.

A little background here:  I have cable, bundled with internet service.  I could do that with satellite TV, but I’m happy with the broadband internet speed I have, and that’s keeping me tethered to cable TV for now.

However, our cable provider, Mediacom, sucks when it comes to its basic cable TV channel lineup.  This is true for a lot of cable companies, still fighting against the a la carte model that internet TV inevitably will provide.  Still, I’ve been to plenty of other places that have different cable providers, and Mediacom’s basic cable channels are not robust by comparison.

This means that the basic cable service I’ve had for years is missing ‘premium’ channels that other providers consider basic.  This includes Golf Channel, ESPNU, and a few others.  (One of the others is Fox Business News, a/k/a the 1% Channel.  It’s beyond strange how this is considered a premium channel, while CNBC isn’t.)

Cheap bastard that I am, I’ve never paid the extra dough for home access to those so-called premium channels.  That ended this week with the effort of one phone call, in which I agreed to pay another $100 a year ($8 per month) for a premium sports and information package.

Ironically, I did this primarily for the ESPNU channel, because I don’t want to miss another bunch of good college basketball games this winter.  And I did it secondarily for The NFL Network, so I don’t miss those games this winter, either.

But the long-term crown jewel for me will be the Golf Channel.  A new ‘go-to’ for when there’s nothing else good to watch.  It’s already paying for itself with end-to-end coverage of the Australia Masters and next week’s Australian Open – two events I couldn’t have cared less about a few days ago!

Fore!

The Liars Club

As we enter the heart of election season in presidential election year, so do we enter a time when the rhetoric is at an all-time high.  If only it was just rhetoric.

These days, we don't have rhetoric, which would be fairly defined as persuasive but insincere speech.  Instead, we have intellectual dishonesty, which I would define as a failure to apply a rational standards that one is fully aware of.

(Yes, I got those definitions with the help of the internet, defined as a place from which you can get information to help prove your point.  Also, don't confuse these terms with another one of my favorites, 'truthiness', coined by Stephen Colbert as something people claim to know intuitively because it feels right, in the gut, without regard to the facts.)

Intellectual dishonesty is what political campaigners (and most people) engage in these days.  It's when a person knows but ignores the facts, and says or does something contrary to those facts in an attempt to convince people otherwise.  Let me use it in a sentence: "Every word that comes out of Michele Bachmann's mouth has the smell of intellectually dishonesty."

While this kind of thing obviously happens in politics, but just think about the day-to-day applications.  What workplace doesn't have one or more employees who aren't as sharp as their co-workers, but tries to cover up their shortcomings by skewing the truth, and parsing the blame onto others?  And don't get me started on the so-called 'financial advisors' who spend their days selling products to people who don't need them, in order to get a big commission.

Intellectual dishonesty is the same as lying, and it is currently pervasive in our society.

We Need More Critical Thinkers

A while ago, I blogged about the politically incorrect topic of stupid people, and how this country has too many of them. It's a statistical fact - check it out.
http://streffblog.blogspot.com/2009/08/stupidity-is-easy.html

Reducing dumbness, however, is only part of the answer to curing society's ills. If we had more 'book-smart' people, that would help, but what we really need are more critical thinkers.

A critical thinker doesn't accept everything they see or hear as fact. They have an ability to separate fact from fiction, based on probabilities and god-given common sense. This negates the herd mentality.

Here's an example from just this past week. More than one person I know, who apparently don't have enough to do, forwarded me emails about some outrageous act of a politician. Since stupid people believe everything they read on the internet, especially things forwarded to them by acquaintances, I can only imagine the collective outrage of the recipients.

Except that none of the email was true. Folks, all you have to do in go to a search engine and type in a few of the key words along with the word 'hoax'. More often than not, you'll find out the email you got had more to its story.

I know, I know, I'm using the internet to prove something else on the internet wasn't true. Fortunately, I'm a critical thinker, and I can separate fact from fiction on the intenet!

Imagine how much better the world might be if more people thought critically, and didn't just accept the words, actions, or faith of others. But suffice it to say - again - that most people are sheep, easily led to the slaughter. That's the entire business plan of Fox News, right?

So if someone tells you to stop being a critic, tell them to start being a critical thinker!