Decision Fatigue
“When the options are few, we can be happy with what we choose since we are confident that it is the best possible choice for us. When the options are practically infinite, though, we believe that the perfect choice for us must be out there somewhere and that it’s our responsibility to find it.”
-Sheena Iyengar in The Art of Choosing
The example in the book is about food choices in a grocery store, but it struck me that this is exactly what people face in personal finance too. In the 100 conversations project, the #1 thing I keep hearing is about how people know they should be doing more to invest and proactively manage their finances, but there are too many voices to listen to and choices to make: Which investor should I listen to? Should I manage my investments myself or have someone manage it for me? If so, who? Which credit card should I pick? What investments should I put my 401k into? Bonds or stocks? Decision fatigue becomes paralyzing.
So how do we become unstuck? I’m not sure I have the complete answer. But I think 1) simplifying is better. Having too many accounts and platforms (just like having too many clothes that you’re trying to stuff into a closet…which is a friendly reminder to myself), becomes too overwhelming and so you end up avoiding it completely.
2) You know more than you think you know. Another common refrain that I hear in the 100 conversations, is that people feel like they don’t know enough to make a decision. These are people I know personally for a long time and I am very confident in all of their financial decision making abilities. They know the basics, but they become insecure in the face of a stream of financial institutions and crypto bro millionaires spewing convuluted financial strategies. But complex financial investments work for those people; it doesn’t have to be what you do.
As Warren Buffett said in this 2013 shareholder letter: “You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick “no.”…
…Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important. (When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle’s scathing comment: “You don’t know how easy this game is until you get into that broadcasting booth.”)
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Money & Crypto
Meta announces hiring freeze (Bloomberg)
Returns by sector in 2022 (Economist)
Intel to IPO self-driving car business unit, Mobileye (WSJ)
Fewer grocery store discounts as food prices rise (WSJ)
New York to provide $225M in debt relief to taxi cab drivers who can’t afford to pay back loans for taxi medallions (Bloomberg)
Indian crypto exchange WazirX lays off 40% of staff (CoinDesk)
Using satellite imagery to determine economic growth and when autocrats lie about it (Economist)
Etc.
“Should I bring anything to dinner tonight or just my crippling anxiety?”
🎧 A good overview of the Nord Stream gas leaks in the North Sea and the ongoing protests in Iran
NASA’s DART hits asteroid for first time
Climber and ski mountaineer Hilaree Nelson dies in avalanche
Podcast Pick of the Week
🎧 Allison Janney was on Smartless (and her, Kristin Wiig, and Laura Dern are going into be in a show together about Palm Beach in the 70s. I’m already in).
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Disclaimer: All opinions are my own. The content on this site and on the podcast does not constitute financial, legal, accounting, tax, or investment advice.
