How to make better stock market, savings and economic decisions

emonseo21

At the heart of all the home economics and investing content I write is a common goal: Learn to make better decisions for ourselves . Because advice will always fall short and will never apply to all situations. And that's if they're good.

Do I invest in this or that? Should I change jobs or stay at this one? The main challenge is that, when it comes to economic decisions, we will always be trying to predict the future .


If we remember how monkeys are better at the stock market than experts , or read the works on " Affective Prediction " popularized by Timothy Wilson and Daniel Gilbert, we realize one thing: People are terrible at predicting the future .

Seriously, it seems that we have a congenital defect, coupled with the fact that, psychologically, we believe that we are good at forecasting, when in reality we are inept .

After all, when you sit down to study Economics, they tell you the joke that an economist is someone who is paid to predict something and then someone who is paid to explain why they were wrong. In fact, I am   Cyprus Email List  still collecting money from bets from colleagues and acquaintances who gambled that Spain would enter a recession in



Going into debt to consume and others that are the worst financial decisions you can make in life
ON THE SALMON BLOG
Going into debt to consume and others that are the worst financial decisions you can make in life
Does that mean we are doomed to make bad decisions about our economy again and again?

Not necessarily, if we look at what those who make the best decisions and make the best predictions are like and what they do.

Because they exist, even if it doesn't seem like it.

How to make better economic decisions by becoming “Superforecasters”
Image of a crystal ball, symbolizing that it is possible to predict the future more than it seems
Professor Philip Tetlock studied more than , forecasts from experts over years . When he calculated the effectiveness of these predictions, the result was that they were just slightly more correct than chance . True experts. All that dedication to blindly beat the election by a hair's breadth.

However, Tetlock discovered another interesting aspect. Since Pareto always seems to be right, among those experts there was a small percentage who were systematically right much more than the rest . So he began to investigate the characteristics of these people, whom he called Superforecasters .

As a result, he also created the so-called " Good Judgment Project ", where forecasting services are offered, he teaches his methods and also how a good superforecaster is .

You don't need to sign up for those classes or buy his book Superforecasters , although I found it interesting. These are the ones who make the best decisions, including economic ones, and this is how we must be , if we want to be among them.

They are more foxes than hedgehogs
This expression is based on the old fable of Archilochus and is summarized in that the hedgehog knows a lot about one thing and the fox knows something about many things . That gives the superforecasting fox an advantage: perspective .

In many situations, the hedgehog is blinded by his wisdom in one thing, believes he has nothing to learn, and makes mistakes , even within his field of experience, because of this.

Or, your limited perspective makes you see the house from only one side , and not completely.

As the proverb says: "To him who has a hammer, everything is nails." Economists tend to see economic reasons and solutions to everything, even when they don't matter. Or those Silicon Valley engineers, who solved a difficult technical problem and are rich for it, have believed the whispers of their pride and think that they can also solve political or social problems, which are outside their circle of competence.