Emotion vs Reason, Round 1: Historical Technology Hypes
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Emotion vs Reason
I’m sure most decisions you make are based on numbers rather than intuition or perception. However, some are clearly misinformed. Not because you did not search thoroughly, or because you couldn’t find enough data. Rather, there’s something increasingly more difficult to analyse than numbers and facts: people’s feelings towards an event.–disclaimer: my opinions and views are not financial advisement. I have personally invested in projects mentioned in this article–
This article will be split into 3 different rounds, as I’ll discuss different topics relating to emotion analysis.
Without further due let me tell you why I think emotion will triumph over reason. Every time.
Round 1: historical technology hypes
I have a thing for historical comparisons, although I don’t think history repeats itself, it sure does have patterns and it does live in cycles. Ignoring what has happened in the not-so-distant past would be a fatal mistake. I’m going to choose three different examples of bubbles, hypes and excitement periods that ultimately resulted in a crash; then I’ll explain how emotion always triumphs over reason (hence, why people lose money). But before I can do that, let me ask you:
Do you know the difference between smart and dumb money?
Smart money is considered to be whale investors and institutions while dumb money is, well, people in general and small investors. What usually happens is what you’re already thinking: smart money buys low and sells high, dumb money buys high and sell low. Now, on which group do you see yourself? Understanding where you are on the scale is the first step to making smarter decisions in the future. This definition is important to retain, as I will show you some examples of lots of dumb money being wiped out in a matter of hours or a few days.