Comments on: Personal Finance and Intuition

By: Fabrizio

Fabrizio — Wed, 21 Dec 2011 09:17:19 +0000

Go definitely intuition and istinct!
Avoid impulse!
It’s all there, and when you start talking about preparation in one way you are avoiding impulse.
Don’t trust rationality (too much I mean), cause it’s represents only the “surface elaboration engine”: the real one in the deepest interconnections of our brain.
Fab

By: AnnJo

AnnJo — Tue, 20 Dec 2011 20:33:10 +0000

@4, Cindy Brick, if I let my “gut” have anything to say about what stocks I buy, then my research is going to be seriously compromised by confirmation bias. I told my “gut” to shut up about such things a long time ago, and if it pipes up when not asked and won’t be quiet, I walk away from the purchase, regardless of what my “gut” says.

You say that “in nearly every case” your intuition was right. See, that’s what I mean. There’s absolutely no way you (or anyone) could know that. If your intuition told you a purchase was wrong and you made the purchase anyway, you simply would have forgotten what your intuition told you, whereas if you walked away from a purchase based on your intuition, there’s little chance you could extrapolate whether a purchase would have really been wrong, since you didn’t make it, and if its wrongness was discernable, chances are good your conviction that your intuition guided you is self-deceptive.

There are some great books out today on the tricks our minds and emotions play on us in any effort to reach wise decisions. Trusting in our “intuition” is certainly one of the big ones.

By: Cindy Brick

Cindy Brick — Tue, 20 Dec 2011 16:50:33 +0000

Why not use both intuition AND research? If your ‘gut’ tells you that a certain stock is a bargain, for example, and research bears that out, I see no reason NOT to buy it.
Similarly, if it seems as high as it’s going, and you have a sense that it’s going to drop some (and you had no plans to hold it long-term)…why not sell it?
I am a firm believer in intuition — especially our God-given sense that something is wrong, though we can’t figure it out yet. In nearly every case, when I felt a person, purchase or opportunity was ‘wrong’ (generally too good to be true) — it was. Your post almost suggests that you shouldn’t use intuition at all. I believe we should, as long as we also apply what my uncle called “common ordinary everyday horse sense.” (He would then bray like a donkey after that — because I usually didn’t apply it!)

By: getagrip

getagrip — Tue, 20 Dec 2011 13:26:41 +0000

I have a friend who bases all decisions on “intuition” without a whole lot of thought. He leads the kind of life that sounds interesting when you only consider the high points he tells stories about. But as his friend whose gotten a lot of late night phone calls, I can say with confidence that his intuition has lead to a lot more failures, complications, and low points sprinkled with those few high points he uses for his tales.

I agree with some of the other commenters above, when you’ve experienced something many times or studied it for a while, then “intution” can help in seeing a real opportunity or making a determination between options. Otherwise you’re just guessing.

By: Geoff Hart

Geoff Hart — Tue, 20 Dec 2011 12:18:35 +0000

Precisely. There’s a pernicious myth that our subconscious is somehow wiser than our conscious mind, and that we should always trust it. That’s true in a very limited set of circumstances, and purchasing decisions isn’t one of them.

Highly trained professionals are a different story. Many of them have internalized the many factors required to support a decision so well that they apply those factors quickly and without consciously enumerating each factor. That seems to be what most people call “instinct”, but it’s not. It’s the result of years of practice running through a list of decision factors on their way to making a decision. In that case, instinct is actually a very sophisticated assessment of the facts, not a “hunch”. Anyone can achieve that level of skill, but it requires work; it doesn’t happen by itself.

There’s also a pernicious myth that people who think things through are somehow cold and calculating. They can be. But learning to think in no way means forgetting how to feel. We need both in our life, and in my experience, it’s the thinking part that’s more often in short supply.

By: T'Pol

T'Pol — Tue, 20 Dec 2011 08:53:19 +0000

I agree Trent. Without a foundation of knowledge, instinct, gut feeling, intuition, whatever you call it, is mere gamble and impulse.