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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 with who we agree, and we read financial articles that 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 an excellent 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? How can you be sure you are correct without exposure to differing views and ideas?

As I get older, I seem to be slowly turning to Ms. Duke’s perspective on seeing different points of view. I have never enjoyed hearing arguments that disagree with my inner beliefs, but I have learned it is essential 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, which was usually of their own making, but I now think that is flawed. After living through my 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 realized how incorrect my perspective was.

Understanding our own biases is an essential 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 essential to read some different perspectives on things. Understanding their perspectives will help you better view the entire story.

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