We learned in the last post on the Dunning Kruger Effect that our knowledge does not necessarily track our confidence.  My knowledge of the unknown is limited and therefore I’d prefer to be prepared for the unexpected.  Is that even feasible?  Let’s dive into the ultimate unknown, our own and others' ability to stay alive.  None of us think we are going to die tomorrow but there are a number of known and unknown risks that could wipe us all from existence: nuclear war, asteroid collision, volcano eruption, a rapture, global warming, a black hole, or something we haven’t had [...]

A little over a year ago, if you would have asked me about a European war, I would have betted against you and in reality I did.  I had multiple investments in Russian run businesses and today I have none.  As information became more readily available, the unknown risk transitioned into a perceived risk and now has become our reality.  How can we plan for future unknown unknowns like the war in Eastern Europe? Acknowledgement The first step is acknowledging that you don’t know everything.  Our Society and culture help us out by humbling “know-it-alls” fairly quickly.  But what about [...]

In my last blog post I addressed what action bias is, and why we, as humans, tend toward this bias. Hopefully looking through a few more examples will help you identify where you tend toward action bias, and then help you set up ways to minimize its effects on you. The following 10 examples are situations where taking action does not warrant praise and has proven more often than not to provide a detrimental outcome. The first 8 are personal finance, investment and business related, the next two are sports and physicians related, and the last one is the example [...]

  Have you ever been stuck in traffic and found yourself honking the horn, waving your fist, or even releasing the bird?  Did any of your actions improve the situation? Maybe you are similar to my parents who live where there is no traffic, but where there is gossip.  Have you ever listened to someone talk about someone else and then validated their thoughts?  Then in hindsight realized you should have done nothing of the sort. Ok, so you don’t drive in traffic or listen to gossip (congratulations!).  This example is for you.  You have found yourself listening to someone [...]

In my last post, I connected an increase in anxiety with the additional choices and freedom brought on by financial independence.  Thanks to Barry and Danielle’s insights I was able to take a step back and see what was happening inside my head, Choice Overload. I have a natural tendency to maximize every decision, and when I face multiple decisions at once it leads to decision deferral, and decision fatigue.  While in my mind I was trying to do great things, in reality I was like the baby above, doing nothing but sticking my foot in my mouth. Once I [...]