In this newsletter, I share content I bumped into the past month that’ll help you become more financially savvy.

This is not financial advice, so please think through your situation before applying anything you read here. 

This month's recommendation:

Thinking Fast and Slow by Daniel Kahneman (book summary)

https://www.youtube.com/watch?v=uqXVAo7dVRU 

Why is this relevant?

Daniel Kahneman died last month, on March 27, 2024.

Kahneman is one of my favorite academics. A Nobel prize winner, he's best known for his work on the psychology of decision-making, highlighting how our mental wiring causes us to make bad decisions.

In my opinion, he is one of the most important writers for anyone managing their finances. Even if you have sophisticated technical knowledge in finance, human irrationality tends to cause this technical knowledge to be misapplied.

Kahneman's work is relevant because when making financial decisions, we must be mindful of our psychology; not just our financial knowledge.

Commentary

"Failure to handle psychological denial is a common way for people to go broke: You have made an enormous commitment to something. You have poured effort and money in. And the more you put in, the more that the whole consistency principle makes you think, 'Now it has to work. If I put in just a little more, then it will work.'" - Charlie Munger

 The video is a summary of Kahneman's book, Thinking, Fast and Slow, which talks about the psychology and perils of human decision making.

For this commentary, I want to highlight 7:30 onwards of the video, which covers the sunk cost fallacy.