Brainwashing 101 for Dummies Summary

Brainwashing 101 for Dummies Summary.

Paul Farrell at Marketwatch had a pretty cool article.
I don't agree with all of them, and some of them are pretty pointless, but here they are.

11 reasons why we are being brainwashed.

1. You know you're almost never wrong
Confirmation Bias - sticking with what you think is right.

Too often, when we are wrong, we have an excuse, but when we are right, we are just right. Maybe we need to ask - why are we right? as often as we ask - why are we wrong?

2. Your "mental accountant" is an embezzler
A dollar of your tax rebate is not the same dollar as your grandma's purse money.

3. You hate to lose more than love to win
Prospect Theory - we hate to lose so much we often sell winners to lock in profit, and we hang onto losers praying for miracle.

This goes slightly against Value Investing approach of "never lose money"
"Never lose money" doesn't mean hang onto shit forever. It means have a good margin of safety to play with.

4. You throw good money after bad
Sunk Cost fallacy

5. Decision Paralysis, so you do nothing
Brain locks up and you can't make decision - result? you lose money.

6. You don't sweat the small stuff
Bigness Bias - small things like brokerage commissions and fund fees matter!

7. You focus on things that matter too little
When you Anchor onto one thing, your brain locks up.

Then the real question would be - how do we know what matters the most? We need an effective system set up to figure out what matters. It's mostly about DRIVERS but how do we FIND those DRIVERS?

8. Your biggest saboteur, overconfidence
Don't think you can oust others with information.

This is the reason why we shouldn't trade on info - no matter WHAT we do, we'll never have that advantage.

9. Follow the herd, into the sea
Groupthink is dangerous! If there is something ALL of us agrees on all at once, that has possibility of being dangerous. In that case, we should start arguing against ourselves.

10. Yes, you can know too much!
Information overload. Number one way to stay smartly uninformed.
I'm almost a victim of this - don't be like me!

11. Joke's on your, knowing them makes brainwashing easier!
I honestly believe this is because of confidence that knowing this makes you a super-investor. It doesn't.