Going Broke…
In the Psychology of Money, Morgan Housel tells the story of a tech executive he encountered while working as a hotel valet. The exec had patented a crucial piece of Wi-FI routers at a young age, and was a successful serial entrepreneur.
This executive had money. He once handed a hotel worker a thousand bucks to go buy gold coins from a jewelry store.
He promptly took those coins and skipped them into the Pacific Ocean.
Surprise, surprise: years later, he went broke.
…or Making Millions
In contrast, Housel offers the story of Ronald James Read. Read was as unassuming as they come. He was a gas station attendant and janitor his whole life. …
You’ve probably seen the headlines of everyday people getting wrapped up in Robinhood day trading. With free trades, there’s a low barrier to entry, so why not try?
And in an up market, it’s easy to make gobs of money with your eyes closed.
But inevitably, a black swan day comes along and, like Richard Dobatse, you lose $860k in a single month.
Or, like Alex Kearns, you become despondent and suicidal.
If you want to day trade the market, you’re going to go up against people who spend every waking second thinking and understanding it, and who have done so for decades. …
Confirmation Bias is one of the most pervasive levers of persuasion.
Thanks to this psychological error, your brain searches for, interprets, and remembers information that confirms your pre-existing beliefs and opinions.
How Confirmation Bias Works
Confirmation Bias works in two ways:
- Your brain seeks out information that confirms its existing views and beliefs, and
- Your brain interprets new information in a way that confirms your pre-existing beliefs.
In other words, thanks to Confirmation Bias:
(1) We seek out inputs that make us feel our current views are right and
(2) We interpret information–including information that disproves our views–in a way that supports our views.
Confirmation Bias explains how two people can look at the same exact event and interpret it differently. …
Now that we’re diving head-first (and helmetless) into an election cycle, you’ll be able to see politicians strut their persuasive stuff in presidential debates.
The election cycle is maddening. So why not make it more enjoyable and turn it into a game?
Click here to download your copy of Presidential Debate Bingo, which includes a short explanation of each of each lever of persuasion.
How do humans fall prey to believing fake news? The truth is more flexible than you may think.
As Scott Adams writes in Win Bigly:
“If you have ever tried to talk someone out of their political beliefs by providing facts, you know it doesn’t work. That’s because people think they have their own facts. . . . And facts are weak persuasion.”
But is fake news really a new phenomenon? The zeitgeist seems to believe that fake news and artificial “grassroots” movements are a recent problem.
They’re not. They’re a manifestation of Homo Sapiens’ psychology. …
How can you use the psychology of images and visuals to increase your impact?
We have previously discussed how getting your audience to “imagine” something is a potent lever of persuasion. For example, some of the benefits are:
- Thinking Past the Sale — People gravitate towards scenarios they imagine; you can increase the odds they make a decision you want by getting them to imagine your desired outcome.
- Availability Bias — The easier it is for someone to imagine a scenario, the more probable and important they think that outcome is. …
The Primacy and Recency Biases are good hacks for making information memorable and seemingly important.
Have you ever tried to remember a long list and only been able to recall the first and last few items? Or gone to a networking event and only remembered the first and last people you talked with? Those are perfect examples of primacy and recency in action.
WHAT ARE THE PRIMACY AND RECENCY BIASES?
“We give too much weight to information we’ve seen, heard, read or experienced most recently.”
- Daniel Kahneman, Thinking Fast and Slow
Primacy and recency biases are both part of the broader “Serial Position Effect,” which is the phenomenon that different items in a series are remembered better or worse depending on their position in that series. …
You can increase the effectiveness of your resume by using persuasive tools.Looking for a new job? Remember: people who don’t switch jobs make at least 50% less than those that do.
You can short-circuit the job hunt by making your cover letters more persuasive. Here are some ideas to get you started:
1. Framing
Don’t talk about why you will benefit from the job. Always frame your cover letter in terms of how you will be valuable to the company.
2. Strategic Ambiguity
Be ambiguous about describing your skills (i.e., describe your experiences and skills generally). Potential employers will instinctively interpret ambiguous skill descriptions to fit the role. …
“When the facts change, I change my mind.”
Charlie Munger
Strategic ambiguity is an important lever of persuasion that may not only help you be more persuasive, but actually improve your own internal decision-making.
WHAT IS STRATEGIC AMBIGUITY?
As Scott Adams explains in Win Bigly:
“’Strategic ambiguity’ refers to a deliberate choice of words that allows people to read into your message whatever they want to hear. Or to put it another way, the message intentionally leaves out any part that would be objectionable to anyone. …
“A single death is a tragedy; a million deaths is a statistic.”
Joseph Stalin
Have you ever watched a tragic event on the news and then spent the next day or two worrying that it might happen to you?
Or have you ever felt the urge to buy stocks when the stock market (or Bitcoin) is surging, and sell when it’s collapsing?
Meet availability bias.
As Peter Bevelin explains in Seeking Wisdom, “[t]he more dramatic, salient, personal, entertaining, or emotional some information, event or experience is, the more influenced we are.”
WHAT IS THE AVAILABILITY BIAS?
Thanks to the availability bias, your brain thinks something is more probable if it’s easier for your brain to process. …
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