it's very annoying to people who have an IQ of 160 that they can also be completely useless
but it happens a lot so cognitive miserliness can cause us to be swayed by irrelevant information
and our own feelings for example leading us to poor financial decisions when buying a
house it can also explain why apparently intelligent people can fall for fake news if they rely
too much on the gist rather than the details of a statement there's a growing sense that
intellectuals of all stripes are producing knowledge cynically with a certain agenda
in mind and if you're looking for the stuff that comes out of policy institutes think
tanks and the speaking circuit you're not wrong there is a problem with really smart
people that is making you dumber and poorer social media platforms like YouTube Twitter
Tick Tock and Facebook have allowed an unrestricted access to the greatest Minds in the world
it's also let us interact with these people instead of only being able to read their curated
publishing being able to watch hours of interviews with world-renowned Scientists or tweet directly
with influential business people is amazing but it creates five big problems and when
these very smart people start talking about investing in personal finance those problems
end up costing regular people lots of money problem number one is the issue of false authority
to become a doctor someone either needs to obtain a medical degree or complete a doctorate
both very difficult academic challenges that demonstrate a high level of intellect in a
very narrow field a doctorate is a project of new research that might research something
that nobody outside of that specific field of Academia has ever heard of new research
is still very important but the skills and knowledge that make it possible to publish
a study of the abundance of distributions along the minor access of the galactic bulge
don't translate to making someone a genius in another field that they have not dedicated
as much time to for those of you who didn't pause the video to look up that joke that
was the title of Neil deGrasse Tyson's PhD Neil deGrasse Tyson is a very smart man but
he is a great example of someone who has assumed that because he is an expert in astrophysics
he is automatically the smartest person in any conversation about anything sometimes
smart people can act stupidly thanks to the the people who are around us the Force Authority
bias or the expert fallacy is a well-documented psychological trap that us humans frequently
fall into and it's not really anybody's fault a recognized expert in one field will automatically
have a platform that draws people to ask them questions the smart person will try their
best to answer the questions even if they are slightly outside of their direct area
of expertise do you believe you have a soul I don't know what a soul using Neil deGrasse
Tyson as an example again he is not the world's foremost expert on black holes but he could
comfortably answer any question the average person would have about them we're like a
black hole be able to suck in another black hole oh good question it's not past your bedtime
if the smart person gains a reputation for being able to answer people's questions they
will attract more questions from a larger audience about things that are outside of
their area of expertise yunagrass Tyson is not a particle physicist but if documentary
producers want him to talk about Fusion Energy he is going to need to do his best eventually
he's asked questions about fields that he has no expertise in and he makes some bad
takes that most people still believe because he is the smart guy on TV the real-life Rick
Sanchez with no humor about him or wit or really anything good about Rick Sanchez the
only thing he has from Rick is that he's into science and he doesn't give a [ __ ] about
anything I guess I am sorry Neil I don't want to pick on you but your Twitter feed and Joe
Rogan appearances just make you too perfect of an example the very smart people don't
even want to spread misinformation but because they are smart they get asked a lot more questions
which results in them giving more good answers and more bad answers anyway Neil deGrasse
Tyson might be the king of overly self-confident intellectuals but at least he hasn't started
telling you how to invest yet and the false Authority problem opens up four other problems
that are much worse so it's time to learn how money Works to find out how listening
to really smart people is costing us a lot of money this week's lesson was made possible
by brilliant figuring out whether someone is truly a subject matter expert or full of
[ __ ] can be challenging but a basic understanding of important subjects can help you identify
the false Authority bias for example their course and logic helps you to detect and identify
if someone is truly telling the truth or lying the course provides you with techniques for
extracting information from any statement such as a lie brilliant covers a lot of subjects
including statistics which is another tool that you can use for determining whether or
not something someone tells you is true brilliant offers a fun way to learn it's much more exciting
than reading a textbook and much easier to retain because you apply what you learn whenever
I'm in transit or riding the train I'll pull up brilliant on my phone they found out how
to make learning something you want to do instead of a dreadful School assignment whether
you're trying to learn something new or just trying to stay sharp brilliant and help and
to get started for free go to brilliant.org forward slash how many works or click the
link in the description and the first 200 of you will get 20 off brilliant annual premium
subscription problem number two with really smart people is what we let them get away
with Enron was the greatest fraud in corporate American history senior leadership at the
company has supposedly grown it from a humble energy provider to a conglomerate with Advanced
Business Systems in a range of fields making money in ways that were just too complicated
for the average person to understand you know Enron it made contributions to a lot of people
around Washington DC and if they came to this Administration looking for help they didn't
find any a lot of investors bought this and the firm's leadership even gained The Unofficial
title of the smartest men in the room we now know that the only Advanced systems those
managers were controlling were the accounting practices that falsified Revenue figures which
led to the company being massively overvalued by investors enron's Executives were smart
people and that meant that the average person just accepted that they were doing the right
thing a very smart person has been a central figure in most corporate frauds Bernie Madoff
was a veteran trader that was changing how money was made on Wall Street Elizabeth Holmes
was the brilliant student who dropped out of Stanford to start a biotech company and
Sam Bateman freed built a lot of the marketing for FTX around his Persona as an eccentric
genius even Charles Ponzi the original American fraudster got away with his scams because
he was exceptionally good at convincing people that what he was doing was too complicated
for them to understand and that they should just give him their money and stop asking
too many questions each of these companies had industry insiders raising concerns about
their business practices simply not making sense a long time before their frauds fell
apart art so why do people fall for scams well self-confidence is often a big factor
that causes people to fall for scams people who believe they are too smart or too well
informed to be tricked are often quite likely to become scam victims people also make bad
decisions when they become emotional by having a leader who was once marketed as a once in
a generation genius it was easy for these companies to quell the concerns or write it
off as the jealous establishment trying to raise fear uncertainty and doubt about their
world-changing business telling a Real Genius apart from someone that needs you to believe
that they are a genius is the hard part but if a company places too much attention on
how smart their CEO is it's normally a bad sign as a Counterpoint to these examples quantitative
hedge funds like Renaissance Citadel and two Sigma use Advanced algorithms to try to beat
the stock market but apart from the incredibly complex math and software engineering they
employ anybody working at these firms could explain what they do to an average investor
that had even the basic understanding of markets and trading problem number three with smart
people is that success is not always an indication of good advice we know that the average person
puts a heavy weighting on the advice of smart people but even the smartest people in the
world don't know how you should invest your money an investing strategy is a very personal
thing because it needs to consider your income objectives risk tolerance Tax Strategies and
Current financial position without knowing these it's impossible for even the smartest
investor to give good advice the problem for a lot of people is advice can be expensive
and licensed professionals are also obligated to give people cold hard truths that they
might not want to hear such that you're never going to get rich earning fifty thousand dollars
a year people don't want to hear this so they look to smart people who are not afraid to
give good advice to see what they recommend someone like meet Kevin is obviously a smart
guy because he has made millions of dollars investing into real estate and meme stocks
and then Millions more by talking about investing into real estate and meme stocks on the internet
the advice he gives carries a lot of weight because he presents himself as an in the note
figure that is willing to teach you the secrets of becoming wealthy from humble beginnings
like he did compare this to to a boomer Like Richard from the plain bagel who is only going
to lecture you about how your portfolio is never going to moon and that you should instead
take your time to write out clear objectives and work those into a realistic budgeting
and investing plan I mean obviously this guy is an idiot he still works a regular day job
and doesn't have a private jet a lot of flashy Financial influencers have used the fact that
they are rich and you are not as an indication that they are smart and that you should listen
to them and that's that I truly believe that influencer marketing is ruining the finance
industry is ruining the industry I work in a lot of these people probably believe their
own hype so to speak and actually think that their path to success is repeatable without
the advantages or Good Fortune they had along the way the psychologist Paul piff ran an
experiment at the University of California that invited pairs of strangers to play a
game of Monopoly the game of Monopoly is already a balance of skill and luck but the researchers
decided to skew that balance heavily in favor of luck the game was rigged so that one player
would start out with twice as much money get to roll four dice to move around the board
faster and got twice as much money when they pass go Paul piff's hypothesis was that the
player with the obvious Advantage would be embarrassed by the situation and try and help
out the other players with a clear disadvantage the researchers instead found the opposite
piff said in the report he published that in various ways through body language and
boasting about their wealth by smacking their pieces loudly against the playing board and
making light of their opponent's Misfortune the rich players began to act as though they
deserved the good fortune that was largely a result of their luck after the game was
over the researchers interviewed the winning players and asked them why they think they
had won the game The Players gave breakdowns of their strategies and best plays but none
of them attributed their success to Locke in the real world the same psychological effect
can happen and people that have been given a lot of Advantage is can attribute their
own action to their success and disregard their advantages even people that have come
from Humble backgrounds often got very lucky along the way to achieving success Their audience
also doesn't want to believe that the smart person just got lucky because that makes their
own success feel less attainable people like the certainty that comes with a guaranteed
result from a predefined set of instructions even though that really exists especially
in the world of investing problem number four with really smart people is what happens when
they start believing their own hype I have avoided mentioning Elon Musk up until now
but he is obviously Savvy in his particular field which is developing systems to scale
new companies but going back to the first problem with really smart people is that just
because musk is great at building companies does not mean he has valuable expertise in
all of the other fields that he thinks he does the culture that he has built around
himself is an extreme example of what a lot of smart people experience when their peers
assume that anything they do will be perfect this can do harm because if the smart people
start believing that their judgment is better than the conventional institution of the field
that they have applied themselves to then they can do themselves and those around them
a lot of harm if a really smart person thinks that they are too smart to go with a Buy and
Hold long-term investing strategy and convince themselves that they will be part of the one
percent of people that make a profit by trading Commodities Futures that doesn't really harm
anybody but them but smart people can work or buy their way into company leadership positions
and reject the advice of their employees and consultants in favor of going with their own
instincts that are obviously perfect because everybody else tells them how smart they are
their intuition is rarely better than the combined brain power of the entire company
so problems occur and those problems also compel the very smart manager to rely on more
instincts and snap decision making and less on good advice from company stakeholders anyways
did I mention that I have a Twitter you should follow me on there while you still can the
final problem with really smart people is when they are not that smart at all and they
just use the reputation to get by on unfounded Merit the internet is full of people that
talk endlessly about their wealth and success while downplaying or completely ignoring their
failures it's very easy to pay for positive coverage and even reputable news outlets will
run stories about people's business success for a small fee building up that personal
branding is step one with step two being cashing it out to promote an online course or sketchy
investment opportunity the power of smart people is that they don't get questioned and
they provide credibility to project objects that don't deserve any so even if someone
isn't smart at all it doesn't take a genius to figure out that making people believe you
are very smart is very lucrative now if you still think that you are too smart for any
of this to affect you then you should go and watch my video and why financial fraud has
cost you your financial future even if you have never fallen for a scam in your life
a big thanks again to brilliant for making it possible for everybody to keep on learning
how money works that's right it's great to have [ __ ] people these [ __ ] people
come with that fancy shitty crows and their big shitty cars you know and these people
have a shitty way of doing things that will expose us all to their shitty ideas