Would it surprise you to learn that what you believe and what you know diverge?
There are numerous, (and sometimes stark), differences between what you believe and what you know. Why?
Some of the distinction can be traced to how we acquire knowledge. Knowledge is based on experiences and interactions with others and therefore is always changing.
Beliefs, however, are usually deeply ingrained and can be difficult to change. Beliefs are things we personally hold as true, although they may not actually be true.
Knowledge usually doesn’t change what you believe. This can end up as a huge stumbling block in the quest to make smart decisions that directly impact your life.
Our brains gather information each millisecond and this then converges with our accumulated knowledge in order to produce a behavioral response.
In our information-drenched world today, beliefs are honed by those around us. As the adage goes, “choose your friends wisely.”
Professor Daniel Kahneman in Thinking, Fast and Slow describes the apparatus that controls how we think and what we believe as “not readily educable.”
A quick example. Nearly a century of empirical data provides strong knowledge about identifying stocks with higher expected returns. This data incorporates different timeframes of economic history from very bad to very good. Yet, despite this overwhelming knowledge, the average investor still believes they can outguess markets. It’s confounding.
Our mission is to help you think differently about money. To change what you believe. Only then can you make good financial choices. Start there.