“A lot of what goes on in the financial world is an attempt to rid yourself of the painful reality of not knowing what’s going to happen next. Someone who tells you there’s a 60% chance of a recession happening doesn’t do much to erase that pain. They might be adding to it. But someone who says, “There is going to be a recession this year,” offers something to grab onto with both hands that feels like taking control of your future.
When you realize that making people feel better is more appealing than giving people useful figures, you start to see why probability is rare.”
Morgan Housel writes in his blog here about being blind to probability. We prefer clarity in outcomes; after all, it’s easier. If there is a 45% chance of rain, we just want to know will it rain, yes or no. Are my investments OK? Yes or No? Perhaps some are, some are not, some we don’t know. We may not even know if the ones we think are OK today may turn out the opposite. It’s complicated. They may also be OK today and wrong tomorrow. It’s not that simple.
It means the decisions need more involvement. More time. More effort on your part. Otherwise, you’ll probably revert to yes or no decisions. It’s easier that way.
The job of investment and wealth managers is to make you feel good. How do they make you feel good? By being more certain…so hopefully, you’ll say yes to what they want you to buy.
It’s your objective to be a little more accurate to improve your outcomes rather than certain.