Updated: December 9, 2021
Listen to Episode 37:
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Episode 37 Chapters:
- 00:52: Bad Habits and Financial Stress
- 01:48: On Thailand and Elephants
- 03:05: Thinking Fast and Slow
- 04:49: System 1 vs System 2
- 07:20: Episode Break
- 09:11: The Habit Loop
- 11:10: On Junk Food and Stress
- 14:31: Changing Bad Habits
Excerpts and Highlights:
There are two ways our brains process the world around us: System 1 and System 2.
System 1 is “fast thinking,” which is associated with snap decisions and subconscious thoughts.
System 2 is “slow thinking,” which is associated with our conscious decisions and analytical thought.
System 1 is large, instinctual, and emotional while System 2 is small, rational, and logical.
An effective strategy to change bad habits is to know your triggers and then, you can either avoid those triggers or consciously change the action that follows.
Bad money habits are often the result of us ignoring the negative consequences of our actions when responding to a trigger.
Links and Resources:
- ElephantsWorld website
- Thinking, Fast and Slow by Daniel Kahneman (Wikipedia)
- The Rider & the Elephant – Jonathan Haidt on Persuasion and Moral Humility
Ask me a question for the podcast: Send a voice message here.
OK, this podcast “weirded me out” just a little. For all the years of my marriage to Beautiful Bride, she still, at times, asks me what I am doing when I stretch out to think for a few minutes. I have used what I termed my “front memory & my back memory.” For me. it is as if I have designated two parts of the brain for specific functions.
The “front memory” is reactive, little thought involved, often simple instinct. A threat pops up, you use your hand to hand combat training on instinct with a shot of adrenaline to protect yourself and others. I see a spike in the underlying I am trading that has no reason to happen, maybe a rumor, we make a snap decision to either sell the position before it “fades” (falls back to earth) or we sell some call premium to earn income. Little to no thought involved, a simple reaction to many years of doing a repetitive business.
The “back memory” is where I send complicated information for processing. Maybe I have read up on a new industry. It is time to go into deep thought about the potential for this new idea. Is it really as great as it looks on first reading. Is there a wide moat around a company in this industry? What kind of projections for growth are for the industry? The “back memory” is where I form the long term battle plan if there will be a trade. HMMMM, maybe I am not alone in the two compartment thinking process?
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