The 12 most overlooked truths of money and life 'no one teaches you in school,' says financial psychology expert
Here are a few things that generally aren't taught in school but I've noticed are vital in business and investing:
- The ability to empathize with people who disagree with you is one of the most underrated skills. Rather than asking, "Why would someone think that?" you'll get farther asking, "What have they experienced in life that I haven't that would cause them to think that?"
- Peoples' desire to have an opinion far exceeds the number of things that need to be opined on. "I don't know" is a phrase that should be praised for its honesty, not belittled for its detachment.
- Intelligence is great, but it's easily muffled by four things: Ego, the inability to change your mind, the inability to communicate with others, and the unwillingness to compromise with a team.
- Psychologist and economist Daniel Kahneman once said, "The idea that what you don't see might refute everything you believe just doesn't occur to us." Take this seriously and you realize that few things matter more than being open-minded and surrounding yourself with people from different backgrounds and experiences.
- Past success always seem easier than it was, because you now know how the story ends, and you can't unremember what you know today, when trying to remember how you felt in the past.
- Learning how to lose gracefully, without being ruined and while learning something new can be far more valuable than learning how to be right.
- Your skill isn't that important. What matters is your skill relative to your competitors. This is as obvious as it is overlooked – especially in investing, when you often don't really know who your competitors are.
- The coworkers I've gotten the best work done with are rarely the smartest or the most experienced, but the nicest and easiest to work with. Emotional intelligence can be so much more important than book intelligence. I wish they'd teach this in school.
- There's often a negative correlation between experience and humility. The more experience you gain, the more you see how less precision and more room for error is vital in a game where we overestimate skill and underestimate luck.
- Most complicated things have a simple explanation. If you can't understand something when you were the intended audience, the person who wrote it is either bad at communicating or intentionally deceptive.
- Expectations can change faster than outcomes, so the successful businesses, investors and people are often in some state of, "Eh, whatever."
- The people who add the most to financial journalism are those who would be writing the same stuff even if no one were reading. They just love what they do, and passion is more powerful than a profit motive. This is true in many fields. The number of people on the Forbes Richest list who "were never in it for the money" is quite high.
Morgan Housel is a partner at The Collaborative Fund, behavioral finance expert, and former columnist at The Wall Street Journal and The Motley Fool. He is also the author of the upcoming book "The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness." Follow him on Twitter @morganhousel.
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