Quote to Ponder
"The most important quality for an investor is temperament, not intellect."
Recommended Links
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- Your 'Safe' Stock Funds May Be Riskier Than You Think - The New York Times
- Bitcoin Is a Brilliant Scam and I Can Prove It (Again) - Casual Finance, YouTube Video
- What I Know at 68 That I Didn’t at 48 - Ronnie Christian, YouTube Video
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Recent Content From Quarry Hill
If you’ve been following along on social, you may have seen some of our new videos and resources. Here are a couple of our recent favorites:
A note from Kyle Moore, CFP®
During the 2020 presidential race, Michael Bloomberg threw his hat in the ring.
The self-made billionaire spent more than $500 million on advertising.
Then a viral tweet appeared:
“Bloomberg spent $500 million on ads. The U.S. population is 327 million. He could have given every American $1 million and still had money left over.”
In a now-infamous television segment, Brian Williams and Mara Gay discussed the tweet on air, marveling at how life-changing that money would have been for Americans.
There was just one problem.
The math was wrong. Very wrong!
If you divide $500 million among 327 million people, you don’t get $1 million each. You get about $1.50.
Yet somehow this elementary arithmetic mistake made it onto national television without raising an eyebrow.
A segment like that passes through layers of editors, producers, writers, and graphic designers before it airs.
Which raises an interesting question:
How did so many smart people miss something so obvious?
As a financial advisor who for a living helps people make high stakes decisions, these are the questions that fascinate me.
After mulling it over, I came up with three possible explanations for how this could happen.
Humans Struggle With Big Numbers
The first explanation is simple: our brains aren’t built to intuitively process very large numbers.
Once we start adding lots of zeros (millions, billions, trillions) our intuition breaks down. Numbers become abstract. Our brains are less inclined to even attempt the math.
But that’s only part of the story. There are much more interesting explanations.
We Stop Questioning Things That Confirm Our Beliefs
When a statement criticizes someone we already distrust, our skepticism tends to disappear.
Billionaires are easy targets. A person with $30 million and a person with $30,000 can both find common ground criticizing someone worth $30 billion.
When a claim fits a narrative we already believe, we often stop asking questions.
It feels good to bond with someone over a common enemy, so why let arithmetic interrupt that?
We Want Somethings to Be True
Nearly everyone agrees that it is absurd that such enormous sums of money are spent on political campaigns.
So when someone claims that $500 million could have given every American $1 million, it feels emotionally satisfying.
Even Brian Williams said during the segment:
“When I read it tonight on social media, it all became clear.”
What actually became clear was that Brian Williams simply wanted the tweet to be true and therefore had no incentive to actually check the math.
The Easiest Person to Fool Is Yourself
Physicist Richard Feynman once said:
“The first principle is that you must not fool yourself—and you are the easiest person to fool.”
Psychologist Daniel Kahneman spent his career studying exactly this phenomenon. His research showed that human decision-making is riddled with biases: confirmation bias, overconfidence, emotional reasoning, and many others.
These blind spots affect everyone, including highly intelligent and accomplished people.
Why This Matters for Financial Decisions
The same dynamics show up in personal financial decisions.
When you really want to buy the dream house, the numbers suddenly seem easier to justify.
When markets fall and retirement is approaching, fear can make a perfectly reasonable investment plan feel dangerous.
In both situations, emotions can overpower arithmetic.
That’s one of the underrated benefits of working with a financial advisor.
Sometimes the most valuable role we play is simply being an objective third party.
Someone who can check the math when excitement takes over.
Someone who can slow things down when fear starts to creep in.
Someone who can say, “Let’s look at this clearly.”
Because the hardest financial mistakes to avoid aren’t mathematical.
They’re emotional and psychological.
And as the Bloomberg example reminds us, even very smart people need help seeing their own blind spots.
This material is intended for educational purposes only. You should always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. Nothing contained in the material constitutes a recommendation for purchase or sale of any security, investment advisory services or tax advice. The information and opinions expressed in the linked articles are from third parties, and while they are deemed reliable, we cannot guarantee their accuracy
