Money Psychology 12: Surprise!
It is smart to have a deep appreciation for economic and investing history. History helps us calibrate our expectations, study where people tend to go wrong, and offers a rough guide of what tends to work. But it is not, in any way, a map of the future. History is mostly the study of surprising events.
Investing is not hard science. The majority of what’s happening at any given moment in the global economy can be tied back to a handful of events that were nearly impossible to predict; for example, the 9/11 attack.
Fukushima nuclear reactor had been built to withstand the worst past earthquake. But it failed because of an even more powerful disaster, the 2011 tsunami. It wasn’t a failure of analysis, but a failure of imagination.
So, use past surprises as an admission that you have no idea what might happen next.
History is the study of change, ironically used as a map of the future.
[The Psychology of Money: Lessons 12 of 18]
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