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Financial Echo Chamber

in Advice, Financial Planning

Many of us seem to be living in a financial Echo Chamber. We have friends, and family who we agree with, and we read financial articles the reinforce our financial plans.

What do I mean by Echo Chamber?

“an environment in which the same opinions are repeatedly voiced and promoted, so that people are not exposed to opposing views…”

Dictionary.com definition (2nd)
Amazon Link to Book

Michael James pointed me at a very good book by Annie Duke, “Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts“, which is quite an eye opener. Ms. Dukes is known as a world class Poker Player but she was a Doctoral Candidate in Psychology before that, and she writes in a very entertaining way.

If all you do is listen to people who agree with your perspective, how can you be sure you are on the right path? Without exposure to differing perspectives and ideas, how can you be sure you are that correct?

As I get older, I seem to be slowly turning to Ms. Dukes perspective on seeing differing points of view. I have never enjoyed hearing arguments that disagree with my inner beliefs, but I have learned it is important to hear them. There is a need to empathize in some fashion with opposing viewpoints to at least understand where they came from.

Empathy does not imply agreement, it is simply understanding it.

For a long time I had a perspective on folks who got into financial troubles, was usually of their own making, but I now think that is a flawed perspective. After living through my own lay off I started questioning my theories, but after talking with Doug Hoyes and reading his book, “Straight Talk on Your Money: The Biggest Financial Myths and Mistakes . . . and How to Avoid Them” (Amazon Link) I really realized how incorrect my perspective was.

Understanding our own biases is an important part of growth.

Examples

If you’d like a few examples where you could benefit from listening to opposing money viewpoints?

  • If you are an Index Fund investor, read some of the active trading newsletters out there, to at least understand their perspectives on the markets.
  • If you believe your house is your biggest investment, maybe read some of the interesting studies on the perspectives of lifetime renters. Their perspectives on the freedom of not owning a home are quite thought provoking.
  • If you live in one of the large cities of Canada and are of the perspective that Real Estate can only go up in price, there are contrary writers to that perspective as well.

Everyones Opinion Matters?

I am not saying you should immerse yourself in contrarian perspectives, but it is important to at least read some different perspectives on things. Understanding their perspectives will help you have a better view on the entire story.

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