YouSaid · the spoken record

William J. Bernstein

lines on the record: 55
first: 2021-03-05
most recent: 2021-03-05
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“eating alto. At the other end of the spectrum, if you're young, there's almost no risk to earning stocks because you're periodically saving. And at some point in your 30 or 40 year saving career, you're going to buy a lot of stocks very cheap and you're going to wind up doing very, very well. And I wish I had understood that earlier in my career so I could have been more aggressive earlier in my career. As it was, I did fine, so I don't feel too bad about that. But if there's one lesson I wish I had learned, I had internalized, it was I could have done a lot more aggressive when I was younger.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, academics like to play this parlor game of do equities become riskier over less riskier, more risky over time. And there are arguments on both sides that most academicians will tell you that they become riskier with time. But what I only fully understood until after doing it, I didn't understand until after doing finance for a couple of decades was that that's kind of a silly question. The real question is how risky are stocks at a given stage in your life cycle? And so if you are retired and you don't have any human capital left, then stocks are three mile island Chernobyl toxic. They're very dangerous because if you have a bear market, a bad bear market that's prolonged, you've got bad sequence risk and you may wind up.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the heart is in the right place. I think they're a little delusional. And of course, they also ignore about the realities of life. And I think they also ignore what do you do with your life when you go to the beach at age 30 or 40. You better have something worthwhile that you want to do with your life. You better have a mission in life. Because if you don't, you're going to wind up suffering from industrial grade enui. I don't want to trash them too much. I mean, I like these people and I think that their message for our society that we live in a corrosive consumer culture that has to be resisted. And you should keep your living expenses down is certainly a very salutary message.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And the best part of doing that is if you can wind up with reasonable savings at age forty or fifty, you don't have to worry about what to do with the last twenty or thirty years of your life because you'll have whole new careers in front of you and these will be things that you genuinely enjoy doing. So don't follow your bliss. Don't take a job just for the money. Try and meld those through things intelligently and balance them off.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the usual admonition to follow your bliss is just awful advice. My one of my favorite New Yorker cartoons is the typical cartoon where they have a guy with sitting on the street in shambles with a hat in front of them. And his sign says, followed my bliss. You have to make a living. And the best thing you can do is to meld those two things. You shouldn't take a job that you despise just to make money. But on the other hand, you shouldn't get a degree in ethnomusicology as well and expect to have a happy existence. You need to have a decent standard of living. You need to provide for your family. And you need to save up so that if you ever get sick of your job, you can follow your bliss at that point and not have to worry about your next meal.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“He didn't start out with the usual four star academic background. He started out as an aerospace engineer, I think, at a state university somewhere. But he did a minor in anthropology, and after working in aerospace for a while, and you look at his pictures, he looks like your typical aerospace engineer with the thin-horned glasses. He doesn't have a pocket protector, but he should have one. He starts doing, he gets a PhD in anthropology, and he starts”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“family and tribe. And that is the essential characteristic of the wealthiest modern society. The reason why the Danes and the Norwegians and the Germans do so well is because they trust strangers, all right? And if you look at the places in the world that don't do well, that have poor economies and poor politics and poor institutions, it's societies with very low radius of trust. So, for example, it's the difference between northern and southern Italy. The radius of trust in northern Italy is very high. The radius of trust in southern Italy is very, very low.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Red than it is. And the thesis is that we are who we are in Western society and we're rich the way we are because the church forbade cousin marriage, which seems like a really weird hypothesis until he explains it to you and then he goes into the data and back of it, which is just absolutely steel trap. He brings an enormous amount of data from anthropology and social psychology to bear on it. And he makes an extremely convincing case. And it's not just that the church forbade the marriage of first cousins. They forbade the marriage of even fifth cousins in some instances. And what that does is it greatly increases your radius of trust. You start trusting people who are outside your immediate”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“ordinary Germans became mass murderers, then you can certainly understand Enron and WorldCom and WeWork, all right. And it's just a very important for people in finance if you can make that jump. Now, the book that I'm reading right now, I'm not even done with it, but it's one of the most brilliant books I've ever read, is a book called The Weirdest People in the World. Weird is an acronym, W-E-I-R-D, which stands for Western Educated Industrialized, Rich, and Democratic, which is all of Western society. And it's a book, first of all, about how unusual we are. It's a book by Man Joseph Henrick, who is an interesting guy in himself, which I'll get to in a minute. And he has this bizarre thesis, which strikes most people as outrageous. And the reason why the book isn't more widely...”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, well, the two favorite books that I always mention to everybody are expert political judgment by Phil Ketlock, which talks about just how difficult it is to forecast, well, how poorly people do at it and particularly the characteristics of poor forecasters, which is immensely valuable since that turns out to be most of the people on TV. And he explains exactly why people on TV talking heads tend to be miserable forecasters and identifies, in fact, that they are. The other book that I recommend, it's kind of a grim book, and it seems irrelevant to finance, which is Lawrence Rees' History of Auschwitz. Auschwitz and New History. And it was a history of Auschwitz from the perspective of the camp personnel.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“for the 20th century or investing for the 21st century. I think he had two different editions. And he was the one who told me to put my book, The Intelligent Asset Allocator, on the web, which jumpstarted my writing career. Now, as far as investing goes, it's the usual suspects. It's going to be Jack Bogel. So I did have some personal contact with, and of course, Fama and French who I had almost no personal contact with, who were my intellectual mentors. And then there were the people who helped me along in my career, among which are John Reakenthaler at Morningstar and Jonathan Clemens at the journal, and then he was succeeded by Jason Zweig, who is someone that I derive a great deal of personal inspiration from as well.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well first of all, career wise, I have to give credit to two people who most people haven't heard of, one of whom is Scott Burns, who wrote finance for the Dallas Morning News. He's not your typical personal finance writer. He went to MIT, and then he would go over Harvard to take writing lessons from Archibald McLeash. And he was the first person who basically encouraged me and told me that very few people had the ability both to do the math and write well, and if I had that ability, and he thought I did, I should be encouraged to do it. And I was very discouraged at that point in my career. So he gave me the impetus. And the other person that someone is even more obscure, a financial advisor, my name is Frank Armstrong, who is the very first person I'm aware of to put a finance book on the web.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I'm afraid I'm not much on popular culture. The series that we're into right now is greenleaf, which is about a African American”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Status seeking again is something that has to do with sexual selection. If you're a female and you're looking for a mate, your major concern is passing on your DNA. And the way your DNA gets passed on is if you and your progeny are well provided for, your progeny will be well provided for if your mate, if the father of the children is a maker. You're not going to pick a weakling because if you take a weakling, then that person, that man will not provide for you and your children, and you are less likely to pass your genes on. And we see it today in society today. You're a lot more likely to pass your genes on if you're a rock star or a professional athlete than... And if you're someone who didn't graduate high school and can't jump,”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“debates and no one took Donald Trump seriously. Someone asked Ben Carson, who, for whatever you think of him, was a very famous neurosurgeon, and they asked him what he thought of vaccination. And he thought the science and back of it was pretty solid. Then he gave the typical Republican answer, which was, but no one's going to force you to take, you know, I don't want anybody to be forced to take a vaccination. And Donald Trump interrupted him and said, I had an employee who had a daughter who got vaccinated, a beautiful child. This was a beautiful child. And she developed autism. It's an epidemic, I tell you. It's an epidemic. And he knew exactly what he was doing. He knew that Ben Carson's data were nothing compared to his narrative. So that's why that's an example of the importance of narratives.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“But the narrative proclivity is something that if you think about it, is fairly obvious, which is that when you and your colleagues fifteen thousand years ago went out to hunt woolly mammoth, you didn't issue mathematical vectors to each other. That's not the way the human mind works. We use our left hemisphere historic ability to communicate with words. So, you know, Joe, you go left, Fred, you go right, and you'll both spear the mastodon from both sides. That's how we communicate with each other, and that's how we transmit our values. We don't do it mathematically or with analytical rigor. And the example of that that I use in the book was very early in the Republican nominating process in late 2015 when the Republicans had these enormous primary”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“In the modern world, because that ability to imitate carries with it the proclivity to manias. And the proclivity to manias, it may not be that dangerous in a state of nature. But in a world of social media, it's deadly.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“in the Andes and all the way down to the Tierra del Fuego. And along the way, human beings had to learn how to make kayaks and how to hunt bison and how to make poison blow darts. And all of those endeavors are very complex. They're very hard to learn. And no one person is going to figure out how to do it well on their own. And so the way that you will survive and the way your tribe will survive is if you're very good at imitating. If Joe and his friends figure out how to build a kayak from scratch, then rather than figure it out yourself, you're going to imitate that. So the ability to imitate carries enormous surveillance value, not only for individuals, but for entire societies as well. And unfortunately, it's a good deal more dysfunctional in this”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, in the first place, and we really haven't talked about this, when you ask what is the primary psychological mechanism of mania is, it's our proclivity to imitate from something as basic as just yawning. It's why yawning is infectious and the infectiousness of the yawning is something that's actually been studied in some detail, and I won't get into how interesting it is, but trust me, yawning is very, very interesting. But what is behind that is something that's very simple. And that's the paradigm of thinking of the human occupation of the new world, North and South America, which began somewhere around 15,000, 20,000 years ago. And within the space of several thousand years, humankind spread from the frozen Arctic wastes down through the North American continent and into South America.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, in the first place, we get back to the Paris bubble, the Mississippi company bubble, and that was John Law's great innovation, was he realized that hard money was a drag on any company's economy and financial development. And so he basically introduced paper currency to France. And unfortunately, he went overboard. But he's probably, you know, I think he's arguably the father of modern central banking and modern finance. He invented the system that we have today. Orl ⁇ ans blew it up. Did the seminal research in this area? You're talking about a book called Golden Setters. Research behind it. Whenever you hear the mainstream economist gag when you mention the gold standard, it's Barry Eichnerene, they're channeling and his work. My favorite trope of”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I honestly don't know. It tells you what generation I belong to. But the actress didn't know who Thailer was, and vice versa. And I thought that was hilarious.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, my favorite story, and I think it may have come from one of your episodes, was when Dick Thaler did the side bet scene with who is it, Jennifer Lopez. And it turned and it turned out that Jennifer Lopez didn't know who Dick Thaler was, and Dick Thaler didn't know who Jennifer Lopez was.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you have to go back a step and ask what are the factors that underlie bubbles. And the biggest factor of all, once you get past the new technology, is, of course, the availability of easy credit. So invariably you see bubbles in times of lowering gradually falling interest rates, which certainly has some relevance today. And what happens is the classic real estate bubble cycle, which is you buy a piece of real estate, it appreciates in value. That enables you to borrow more when you collateralize it. So you take that capital and you buy more real estate, the prices continue to rise, which enables you to borrow more and more. It becomes a self-inflating cycle until it finally blows up.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we saw that was an extreme example. I don't think we've seen anything quite like it ever since, but certainly the amount of IPO issuance of new share issuance of new company births in the 1990s was a very similar phenomenon and left us with some companies that are very important today, prime among which is Amazon, no pun intended.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“The concept that I talk about in the book is that technology investors tend to be capitalism's philanthropists, okay? They tend to put money into vitally needed infrastructure that benefits society at large, that benefits all of us, whether it's the railroads or radio or television or aircraft manufacture, but they don't make any money in the process. They'd probably be better off as the old joke goes throwing half the money out the window and burning the other half.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, that is something that's almost a constant of financial history is there are technologies that really change the world. I mean the Internet really did”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“serious journalistic ethics. Walter Cronkite and Edward Armero tended not to lie to people, although Adolf Hitler did, and he certainly spread a mass delusion, and he did it primarily with radio.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, I think that's absolutely true. Mania can spread more rapidly and more widely today than it ever could before. The thing that's really interesting is that with each iteration, with each advance in communications technology, you have the potential for accelerating delusions. For example, it's no accident that two of the delusions that I wrote about in the book were 16th century episodes that followed hard on the heels of the invention of the printing press. That wasn't an accident that we started to see several religious mass delusions in continental Europe starting around the year 1500 or so. The really interesting thing is why we didn't see all that many manias with radio and television. And the answer was they had built-in filters.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's because disconfirmation is a solitary process. It's a process where you have to look inside yourself and say my God, I was an idiot. And it's a very individual process, whereas the spreading of the mania, the spreading of the virus, of the contagion is a social process.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I observed the way everybody else did, the ability of the Islamic State to attract tens of thousands of people from around the world, including from some very prosperous and secure Western nations, to go to one of the most dangerous and worst places on the world and to, in many cases, to die or to become seriously injured. And the way they did it, it turns out, was by deploying this end times narrative, which Makay had also written about in his book. And I realized at that point I had to update the book because we now know a lot more about the neuropsychology of why these things occur, which Mackay couldn't know because of the state of science at the time.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“right before the crash in 1907 and recognize the signs of the time. And he loved the book so much that he actually wrote the introduction to the 1932 edition of the book. And of course, I read the book in the mid-1990s, just before the tech bubble started to really get going. And I thought it was vaguely interesting, it was sort of like a bad B movie about the Roman Empire. It wasn't really relevant to the financial markets at the time, which were pretty well behaved in retrospect. And then all of a sudden, before my very eyes, I saw this bubble blow, and it saved my bacon the way it did probably most other people who had read the book. So that sort of stayed in my memory banks. And then, you know, five or six years ago,”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, yes, Mackay was a journalist who in eighteen forty one writes this book Memoirs of Extraordinarily Popular Delusions in the Madness of Crowds. And as you and I both well know, it's a seminal book in finance. It's one of those books that you tell every practitioner at some point to read because it described the two great bubbles of the 18th century and also the supposed bubble that surrounded tulip bulbs in the 17th century, wide phenomenon as Mackay made it out to be. But it's the most famous chapter in the book because he coins the word tulip mania and gives it to the English language. And so for generations after that, the book has remained in print and has saved people's bacon. Bernard Baruch famously read the book.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. Well, that's because you and I are older than dirt, and we are of a generation when cars were really, really important. To young people, their phones and the capability of their phones are much more important in the capability of their cars.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“He lost that bat. Yeah, yeah. So you see that certainly with Bitcoin. Now, Tesla is a more difficult case. I mean, Tesla may actually wind up being a very successful company, whether it will justify its valuation is another story. There are other people in the world who know how to make electric vehicles besides the Elon Musk. And so it's not immediately clear that that's what's going on. I don't see the kind of mania surrounding Tesla stock. What I see the mania surrounding is the Tesla car, which is a different thing. The real passion that I see is not that people love their Tesla stock. It's the evangelism of people who love their Tesla cars.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think certainly Bitcoin exhibits all the behavior of a bubble. You see large groups of people who think that they're going to become effortlessly rich, investing in Bitcoin. You see people quitting their jobs to trade it. You see anger directed at you when you express skepticism. My favorite bit of anger was John McAfee's famous statement that he would perform an act on himself that requires great spinal flexibility on national TV if it didn't hit it at half a million dollars. And then finally, a date that's already passed.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Here's another quote from. I don't know the answer to that, but it is a near constant feature of human nature to believe that things were always better a generation or two or three generations ago when it's manifestly not the, that's manifestly not the case. And you can see it all the way back to the dawn of literacy. I mean, one of the first archaic Greek poets was a fellow named Hesseod, who is well known for a collection that he wrote called Works in Days. went to hell in a handbasket until they were in the current generation when no one respected their elders. and the world was corrupt and things were generally awful. It was the origin of kids these days.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“My favorite example of that was in somewhere around zero six or seven, I was listening to Bob Schiller be interviewed by somebody about the real estate bubble that was still evolving at that point. And he was being interviewed alongside of someone from the National Association of Realtors. And she wasn't having any part of it. And finally, she got so frustrated with Professor Schiller that she stopped him and said, Professor Schiller, I don't know who you think you are, but you don't know the first thing about real estate.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, in finance, that's one of the ways that you identify a mania or a bubble. It's one of the characteristics, which is when you disconfirm when you give a disconfirming opinion to someone who is in the grips of a financial mania, this delusion that they're going to become effortlessly rich, they push back and they get very angry. And I don't know if this happened to you, what you were doing back in the late 90s, but I was still in middle age back then. They got angry at me. They told me I just didn't get it. They told me I was an idiot in one or two people made asturgions about my parenthood. They don't like that at all. And that was an experience that a lot of people had. And it's the same thing, obviously, with religion. It's why you don't argue with people ever about religion.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, one of the what my book really is is it's really a medication on human nature. So we've already discussed the fact that man is the ape to tell stories. The foremost thing which we haven't talked about yet is man is the ape that imitates. But the third most important characteristic of human nature I talk about is man is the ape that seeks status. Why do we seek status? Well because it helps us pass on our DNA, particularly if you're a male. It's why rock stars and athletes do so well with women because in a state of nature if you're good at telling stories or if you're good at hunting animals you can support meats. So it's the same thing. It's a very basic part of sexual selection. We seek status. so we can pass on our DNA.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, again, it's got obvious survival value. In the first place, it's something that's almost so obvious that we never talk about it. I mean, things generally getting better is not what makes it to the headlines, all right? So we don't intend to good news as much as we attend to bad news. And in a state of nature, once again, it has obvious survival value. One of the questions I get asked as a doctor, or did get asked as a doctor, and people who still ask me this question, is, you know, when I was ten years old, I ate some Chinese food and I got horribly sick. And I've not been able to look at Chinese food ever since. Why is that? I can't get past it. And the answer is very simple. If in a state of nature you ate a certain mushroom and it made you sick, never wanting to have that mushroom again. And it was a very useful response.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“evolution, yeah, but today it's the other way around. Today, the false positives that we're prone to have a very high cost.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And you jump, but it's really not a tiger, it's something else. You haven't lost much. But if you underinterpret the black and yellow stripes, then you're lunch. So false positives. Evolutionary drive that leads us to overinterpret things. And the analogy, I think, that's best is that if you're a skunk, millions of years of evolution have told you that when you meet a large predator, you turn 180 degrees, lift your tail, and spray. And that's very, very functional and very useful in a state of nature. But in a semi-urban environment where the biggest threat to your existence is a hunk of steel weighing two tons moving at 60 miles an hour, that is not a functional response. And unfortunately, that's the world we live in today.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, in a state of nature, you have to react very quickly. If you see black and yellow stripes in your peripheral vision or you hear the hiss of a state, you had better move and better move quickly. And that leads to a number of things, but number one is the dominance of your fast moving limbic system. The limbic system is the fastest moving central structure that you have, at least in your brain it is. And so evolutionarily, it's got real survival value, but it also leads to something else, which is patternization, seeing patterns that really aren't there because there's relatively little penalty for doing that. If you think you see yellow and black stripes in your peripheral vision,”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's almost everything. And to the extent that you succeed in finance, you succeed in finance to the extent that you can suppress the limbic system, your system one, which is the very fast moving emotional system that we have. If you can't suppress that, you're probably going to die poor.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, to bring in a four bit term, that's a classic Hidari and unbalanced state, and it has to be resolved one way or the other. And the way most people resolve it is they cut themselves off from people who they have strong political disagreements with.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“that Donald Trump isn't so good or you have to decide that you don't like your friends so much anymore which is much more likely to happen because people find it easier to lose their friends than to completely obliterate their belief system and so you can actually do functional magnetic resonance imaging and you can see these two mechanisms at work you can see certain areas of the brain lighting up when you're in a balanced state and you can see certain other areas of the brain light up when you're in an unbalanced state and then when that gets resolved you see other areas of the brain”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, what you're talking about is a concept that was written about in nineteen forty six by a psychologist by the name of Fritz Heider. And it's an important concept because it explains a lot. So I'll spend just a little bit of time on it, which is that of the balanced state. So let's say that you're a Trump supporter, okay, and you meet someone and they're a Trump supporter and you really like the person, then you're in a balanced state, all right? Now, if you meet someone who thinks that Donald Trump is Satan incarnate and you think that that person is a charcoalhead, then you're in a balanced state too because it enables you to dismiss his or her opinion. But on the other hand, if you're a Trump supporter and you disagree with your very best friend about it, about Donald Trump, then you're in an unbalanced state. And you have to resolve that. You either have to decide”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you said the magic words. Cognitive difference was something that was written about and talked about by Leon Festinger, although he didn't invent the term. And it's somewhat overdone, I think, especially in modern culture, but it's certainly still a fact that really what cognitive dissonance is about and confirmation bias is about is it's not necessarily doubling down or reinforcing your beliefs when presented with contrary data, although that happens all the time. But it's more the avoidance of inconvenient facts and things that this confirm your theory. And to give you an example, there are people out there who believe that the Bible is perfectly prophetic, and there are a lot of very prophetic things in the Bible, things that came true. But there are a lot more things that the Bible prophesizes that didn't come true. And those get convenient.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, absolutely. In fact, that's the way it happens most of the time. You know, when someone goes up on a ledge and threatens to jump and a crowd gathers below them, a small percentage of the time, maybe a few percent, maybe 5 or 10% of the time, people start shouting up for the person to jump, all right? This is one of the sad accoutrements of human nature. Well, certainly there's no leader there. Certainly possible. In fact, I think that history shows that most Mass Mania really don't have an identifiable leader.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. And you can throw into that conspiracy theories social psychologists have found that the two biggest correlates of conspiracy theories are a belief in the end times, that is the theological, the religious end times, and the other characteristic that it correlates with is Manichaean thinking. I believe that the world is divided into black and white, good people and bad people with nothing in between. To the Manichean personality, even though we know that happens all the time.”
2021-03-05 · Masters in Business · William J. Bernstein on Crowd Behavior (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source