Why should investment be cautious and consumption be rational?

With the improvement of life and the general increase of per capita income, various investment methods have appeared in the market, such as funds and stocks. These investment methods make some people rich overnight, attracting many people's attention, and people are scrambling to look at these investments. However, it can't be ignored that not all investors have made a lot of money, and some even went bankrupt and lost all their money. Therefore, in the face of these venture capital, whether you have money or not, you must be cautious.

Be cautious in investment and rational in consumption. What should be the correct approach?

With the development of market economy becoming more and more perfect, rationality is particularly important for those business-related behaviors. Because only the decision made through rational thinking is objective, and the economic benefits can be maximized.

Such as investment. Investment is a highly rational business behavior, which requires "careful calculation" first. The so-called prudent calculation actually requires investors to make a cautious prediction before investing. Only when the income is greater than the cost can investment be made, which is an estimate of the cost of those upcoming behaviors and the income that will be brought by the upcoming behaviors. Therefore, for people who are used to investing, they pay great attention to income and risk control.

Samuelson, a professor at MIT and a famous economist, once did this experiment. Once, he made a bet with his colleague that if the coin was upside down, he would win $65,438+0,000, and if it was upside down, he would pay his colleague $2,000.

At first glance, this bet seems to be very beneficial to Samuelson's colleagues. Because as long as this colleague contributes $65,438+0,000, there is a 50% chance of winning $2,000. Of course, he also has a fifty-fifty chance of losing $ 1000. After this analysis, from an economic point of view, the actual situation is this: its real expected return is 500 dollars, and the calculation method is 50% × 2000+50 %× (-1000) = 500.

Unexpectedly, this colleague refused the bet that seemed to be beneficial to him. He said, "I won't bet with you because I think the loss of $65,438+$0,000 is much more important to me than the gain of $2,000. But if you vote 100 times, I agree. " In other words, what Samuelson's colleagues want to express here is that it is difficult to get the result of the average law I want once, but 100 times can.

Someone once did a coin toss experiment. The experimental results show that after throwing 10, 100 and 1000, the probability of getting a positive result is about 50%. The only difference is that when you throw 1000 times, the probability of getting a positive result is closer to 50% than throwing 100 times. That is, repeating this independent and unrelated experiment many times (the next result has nothing to do with the previous one) can reduce the risk of the passive party, so Samuelson's colleagues are prepared to benefit steadily through this "average rule".

So, next, Samuelson's colleague put forward this betting rule: "We bet 1000 times, and each time you bet my 1 with $2." In this way, Samuelson's colleague's portfolio risk is fixed, and his initial capital is greatly reduced, that is, up to $500 (assuming that he is unlucky in the first 500 times, it is unlikely). We agree with Samuelson's colleague's practice and think it is his most sensible one. There is a simple reason. The rule he proposed is equivalent to allocating $500 to 65,438+0,000 identical and independent bets, so the risk of the portfolio will be approximately zero.

This shows the extraordinary role of investment rationality in investment-greatly reducing the risk of investment. This is the difference between investment and gambling, because investment is a well-thought-out rational behavior. For those who are good at investing, they will never do things they are not sure about easily, which is why Warren Buffett has only invested in two products for a long time, one is Coca-Cola, and the other is the most famous razor in the world.

Because he knows that investing in these two brands is a shoo-in for himself, and the risk is almost zero. So every time he shoots, he hits. So he has a famous saying: investment is a gamble, a gamble that knows the result. The result he said here is very simple, that is, winning.

Therefore, "avoiding risks" is almost the business philosophy of all investment masters. We often say that smart people never do stupid things. Similarly, those successful businessmen will not rashly control their own funds and spend blindly.

There is an ancient saying: "A gentleman loves money, takes it wisely and uses it wisely."

In fact, it already contains the concepts of investment and consumption, because the "Tao" and "Fang" it emphasizes refer to the rational planning of investment and financial management.

So what kind of investment can be called rational investment? According to the explanation of economics, rationality means that people have the characteristics of maximizing their own utility. Generally speaking, investors in the investment field are divided into three categories because of their different characteristics: the first category is risk aversion; The second category is risk neutral; The third category is risk lovers. Risk-averse people want a word "stability". The rational performance of investment is: if there is no excess return and risk premium, then no one will try to pull him into the water; The second kind of people-risk neutral people, are not as extreme as the first kind. He only decides whether to make venture capital according to the expected rate of return, which belongs to the style of impartiality and combination of static and dynamic. The third kind of person is completely different. Their aim is: "Play is the heartbeat." They regard risk as a pleasure and permeate their investment behavior.

According to a statistic, most investors are risk-averse, but everyone's risk aversion is different. Therefore, for most investors, the rational investment we define here is: if there are more risks, there must be more income to compensate, and the risk and income should maintain a certain balance.

Of course, consumption rationality corresponds to investment rationality, but rational consumption is as difficult to grasp as rational investment. Theoretically speaking, the characteristic of personal consumption is that for a specific consumer, everyone's consumption will naturally be different according to their own characteristics, and the marginal utility of all consumer goods (including leisure) is equal. The so-called marginal utility refers to the new utility brought by consumers adding a unit of goods or services in a certain period of time, that is, the increment of total utility. In economics, utility refers to the ability of goods to satisfy people's desires, or, utility refers to the degree of satisfaction that consumers feel when they consume goods.

Suppose consumers are asked to choose between bread and milk. If he eats too much bread, it shows that he has reduced the marginal utility of bread (even disgusted). The result of this can only be that this consumer will reduce the consumption of bread, but need to increase the consumption of milk until their marginal utility is equal. But in real life, utility is just a personal feeling, which is difficult to quantify. There are many reasons, the most important of which is influenced by personal preference, which is not only difficult to compare, but also impossible to measure. However, due to the abstraction of measurement standards, it is difficult to be rational in consumption.

Here is an interesting question about consumption rationality, that is, is the law of diminishing marginal utility applicable to all commodities, and is it a panacea? From the above analysis, it obviously applies to bread and milk, but what about money? The answer may not apply.

In addition, consumption rationality is also restricted by other aspects, such as "the assumption of completeness of choice". For example, if there are two projects, A and B, then there will be three situations, that is, people think that A is better than B, or B is better than A, or both are equally good, and the fourth situation is impossible. If you choose something that is beneficial to you, you can say that your consumption behavior is rational. However, the economist Amartya? Sen tells the story of "Brittan's Donkey" in his book to question this "integrity" hypothesis.

The story goes like this: It is said that a donkey in Bridan faced two piles of grass, because there was no way to choose which pile was better, and finally starved to death. Obviously, it doesn't think that A is better than B, nor that B is better than A, nor that both piles are equally good. So, what does it think? The answer must be that we don't know.

This explains a problem: in real life, there are many more possibilities than "theoretical argumentation". Everything in the world is complicated, which cannot be completely covered by theory.

Reason has always had such a characteristic, which is easier said than done. Because rationality means the best choice, which is like how to find the easiest path to achieve your goal in a forest with criss-crossing paths. In order to achieve this goal, you should not only have a deep understanding of your environment, but also be able to eliminate all kinds of external interference and put aside many fantasies and temptations. In fact, rational consumption is the same. Only by not being influenced by emotional cognition and proceeding from actual needs, can we be rational by trying to "review and quantify" our own consumption details.