Many people overestimate their intelligence
I think we can avoid a lot of trouble in life if we stop and ask ourselves, “Am I the first person to think this?”
Particularly if you’re on a break-away from the mainstream, thinking that you’ve discovered something that the herd just doesn’t see. Take a minute, sit down and ask yourself, “Am I the first person to think this?”
It’s funny how weeks have themes sometimes, hey. Well, this was a theme for me this week. I met a few people who have landed themselves in hot water and probably should have asked themselves this question before they gambled everything on a long-shot.
Let me give you some examples.
So think about someone who sold up their property in 2003/4, thinking that a crash just had to be around the corner.
Sure, it was possible to tell the story at the time, but if they had asked, “Am I the first person to think that this major asset class is about to go down in flames?” they might not have been so confident.
Because the answer, if they had been honest, would have been no. Not at all. At any point in time, there are decent chunks of the population who expect that housing/stocks/gold/whatever is about to collapse.
And how many of them turned out to be right? A staggeringly small percentage. Crashes do happen, but much less often than we actually imagine. And across time, the chances of being one of the doomsdayists, at the right time to be a doomsdayist, is actually very small.
We’re not good at balancing statistics in our minds, which is why we’re such terrible gamblers, and this is another example.
So if you’re thinking, yep, housing is about to crash, you’ve got to keep it in mind that you are not the first human to have this kind of thought, and at least statistically speaking, the chances of you being right are very, very small.
And if the chances of you being right are very, very small, then you shouldn’t gamble everything on your hunch. You shouldn’t sell your lovely terrace house in Surry Hills for example
What are some other examples I’ve seen recently?
“Money is a scam, therefore I’m throwing everything into Bitcoin.”
There’s another example. People have known money is a scam for centuries, but how many of them lived to see a currency actually collapse? Practically none. So tipping everything into Bitcoin is a wild gamble.
(I’m still a fan of Bitcoin, but I’m not putting 100% of my wealth there. No way.)
Another variation on that is
“The stock market is one giant bubble. I’m putting everything I have into gold.”
Literally, thousands of people have lost fortunes on that gamble over the years.
Or what about,
“Civilisation is about to collapse. I’m retreating to a bunker in the hills.”
That one is very common too. Many humans have had that thought over the years. And many humans have had to wander out of the forest as they approached retirement age and they realised that they were getting too old to live off possum meat.
Now I’m not saying that everything’s rosy and will always be rosy. I’m just pointing to this tendency we have to overestimate our ability to pick massive shifts in the human story.
And if we’d stopped to think about it – If we had asked ourselves ‘Am I the first human to think this’, we would have realised that a great many humans had had very similar ideas in the past.
And when we looked at what had happened to them, we would have realised that the majority were proven to be wrong.
And that should have given us a moment of reflection. Hmmm. Maybe selling everything to buy canned food isn’t the right strategy here.
So today I’m asking humanity to check themselves and not overestimate their intelligence
… because I like banging my head against walls.