In investments, people seek pleasure by achieving their objectives instead of searching for perfection or maximum return.
Remember the DeLorean from Back to the Future? An iconic, technically advanced car, yet a resounding commercial failure. The parable of John DeLorean, the visionary creator of the car, teaches us a valuable lesson on investments: technical perfection is not synonymous with success.
Each of us is interested in a car not only to take us from point A to point B. We also want an object that distinguishes us from others or that makes us belong to a particular tribe. Or, on the contrary, we just want a machine that does its job without giving us any worries whatsoever. In short, we are looking for our goal, not technical perfection.
And also in investments people are not guided by the search for perfection or maximum return, but by the search for their pleasure, which translates into the achievement of their goals.
Therefore, we are not interested in an investment that promises maximum profit but does not match our desires and we do not buy it.
The investment sellers know this well and offer "fake personalized" solutions to maximize the pleasure of each customer, in exchange for depriving them of returns that deep down they don’t want.
So to improve the returns on our investments, even before entering into the technical detail of the proposal, we need to understand who we are and what we want.
Only then will we be able to understand how to increase profits without harming the seller.
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So to start understanding who you are, ask yourself two questions:
Do I prefer action or reflection? Do I prefer to act and then adapt along the way, or plan meticulously before moving?
Let me be clear that with this question I don’t want to make some kind of distinction between "dumb" and "intelligent". With equal intelligence some people start and do; then if necessary they make ongoing adjustments, does Elon Musk and Space X tell you anything? Others, however, want to imagine the whole plan first and then start, like NASA.
The other question is: do I prefer belonging or distinction? Do I look for solutions that make me feel part of a group or that distinguish me from the crowd?
The answer to these two questions generates 4 types of investors:
1) Belonging and Action: the disinterested
They dedicate little energy and time to investments. They are the ones who buy the easy-to-understand packages, such as BOTs or savings accounts in the nearest bank. In short, those who want 3% without making a rate...
2) Understanding and Belonging: the willing
They are interested in understanding but also want to be reassured. Going with the herd reduces anxiety. Brands were born as a convenient shortcut for impractical people: a saving of energy when facing a problem.
3) Distinction + understanding: the theorists
They need to understand before acting. They often act with a bit of effort. Being in a large group or alone leaves them indifferent.
4) Distinction and Action: the self-taught
This group is interested in starting to act because they understand by doing. And then they adjust the shot.
Now that we have defined the groups, it is necessary to specify that none of these approaches is best and we often use all the schemes, based on the situations.
Understand that these people will buy very different investment proposals. It’s about becoming aware of the pros and cons of each attitude so that we can step out of our natural mental binary and see things from another angle.
But to examine how each type of investor can shuffle the cards by going out of their mental corridor and squeezing an additional return from their supplier, we must make one more bet.
Original article published on Money.it Italy 2024-03-18 07:30:00. Original title: Le quattro tipologie di investitori. Ecco cosa li caratterizza
