Hello everyone!

If you read last week's newsletter, you're probably aware that I've been supremely impressed with the book, The Psychology of Money by Morgan Housel. This week I am going to share another excerpt that absolutely blew me away.

The man in the car paradox

Imagine you are waiting outside a really nice restaurant.

Your attention is suddenly drawn to a red Ferrari that pulls up in front of you. Usually, you aren't impressed by cars but this one catches your attention. You start thinking about you owning such a Ferrari.

This leads you to wonder. If you had a Ferrari, it would most definitely signal your wealth and garner you a lot of attention, respect and admiration. Every eye would be on you and people's perception of you would change accordingly.

Here I draw your attention to the fundamental paradox of this very mental image. Let's address it: I never mentioned (and you never imagined) the driver.

The man in the car probably believes all the same things about the car that you do. That it will confer him respect and admiration, that it will make him effortlessly cool. But in reality, no one cares about the man (or woman) in the car.

The paradox of the man in the Ferrari is that you believe that if you were the man in the car, people would notice and admire you, but you believe this while ignoring the man in the car.

Housel recognizes that humans often buy things to impress people, but this approach usually backfires.

I am not implying that you shouldn’t buy a nice car or that it’s never a good idea to impress people. With the above allegory, I'm stressing that trying to impress people with purchases often has a high cost and a low payoff.

It will take some time to sink in, as it did for me. But hang in there, as I did too.

Until next time,

Anujeet.

Anujeet’s book journey

Currently I am reading:

A Promised Land - Barack Obama

Aggregate, the weekly quote

"No one is more impressed with your stuff than you are."

-Morgan Housel

Harmony, the weekly song

Bad Habits - Ed Sheeran