To understand the psychology of the modern consumer and to grasp where

they might be heading next, you have to know how they got here.

How we all got here.

If you fell asleep in 1945 and woke up in 2020 you would not recognize the

world around you.

Confessions

Sandy Gottesman, a billionaire investor who founded the consulting group

First Manhattan, is said to ask one question when interviewing candidates

for his investment team: “What do you own, and why?”

Not, “What stocks do you think are cheap?” or “What economy is about to

have a recession?”

Just show me what you do with your own money.

All Together Now

Congratulations, you’re still reading.

It’s time to tie together a few things we’ve learned.

This chapter is a bit of a summary; a few short and actionable lessons that

can help you make better financial decisions.

First, let me tell you a story about a dentist appointment gone horribly

awry.

When you'll Believe Anything

Imagine an alien dispatched to Earth. His job is to keep tabs on our

economy.

He circles above New York City, trying to size up the economy and how it

changed between 2007 and 2009.

The Seduction of Pessimism

“For reasons I have never understood, people like to hear that the world is

going to hell.”

—Historian Deirdre McCloskey

Optimism is the best bet for most people because the world tends to get

better for most people most of the time.

But pessimism holds a special place in our hearts. Pessimism isn’t just

more

common than optimism. It also sounds smarter. It’s intellectually

captivating, and it’s paid more attention than optimism, which is often

viewed as being oblivious to risk.

You & Me

The implosion of the dot-com bubble in the early 2000s reduced household

wealth by $6.2 trillion.

The end of the housing bubble cut away more than $8 trillion.

It’s hard to overstate how socially devastating financial bubbles can be.

They ruin lives.

Nothing's Free

Everything has a price, and the key to a lot of things with money is just

figuring out what that price is and being willing to pay it.

The problem is that the price of a lot of things is not obvious until you’ve

experienced them firsthand, when the bill is overdue.

General Electric was the largest company in the world in 2004, worth a

third of a trillion dollars. It had either been first or second each year for

the

previous decade, capitalism’s shining example of corporate aristocracy.

Then everything fell to pieces.

You'll Change

Igrew up with a friend who came from neither privilege nor natural

intellect, but was the hardest-working guy I knew. These people have a lot

to teach because they have an unfiltered understanding of every inch of

the

road to success.