Page 20 - Morgan Housel - The Psychology of Money_ Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

Your personal experiences with money make up maybe 0.00000001% of
what’s happened in the world, but maybe 80% of how you think the world
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works. So equally smart people can disagree about how and why recessions
happen, how you should invest your money, what you should prioritize, how

much risk you should take, and so on.

In his book on 1930s America, Frederick Lewis Allen wrote that the Great
Depression “marked millions of Americans—inwardly—for the rest of their
lives.” But there was a range of experiences. Twenty-five years later, as he
was running for president, John F. Kennedy was asked by a reporter what he
remembered from the Depression. He remarked:

I have no first-hand knowledge of the Depression. My family had one of the
great fortunes of the world and it was worth more than ever then. We had
bigger houses, more servants, we traveled more. About the only thing that I
saw directly was when my father hired some extra gardeners just to give
them a job so they could eat. I really did not learn about the Depression until
I read about it at Harvard.

This was a major point in the 1960 election. How, people thought, could
someone with no understanding of the biggest economic story of the last
generation be put in charge of the economy? It was, in many ways,
overcome only by JFK’s experience in World War II. That was the other

most widespread emotional experience of the previous generation, and
something his primary opponent, Hubert Humphrey, didn’t have.

The challenge for us is that no amount of studying or open-mindedness can
genuinely recreate the power of fear and uncertainty.

I can read about what it was like to lose everything during the Great
Depression. But I don’t have the emotional scars of those who actually
experienced it. And the person who lived through it can’t fathom why
someone like me could come across as complacent about things like owning
stocks. We see the world through a different lens.