⭐ Merited by JayJuanGee (1)
[edited out]
The category poor people with good income is the worst because they are wasting an amazing life opportunity. You can waste a fraction of it and learn from it and I think that is what most people are going through, making mistakes in the right moments is sometimes the best that can happen to you. But I know that in bitcoin many people wasted a once in a lifetime chance for the many in a lifetime things, just because they didn't have them before or are part of the poor people with good income group.Sure, there are some poor people with good income who will be able to learn and to use their good income to invest rather than consume, yet the ones that learn and get themselves out of poverty are not necessarily the normal outcome, since surely it could be possible that poverty teaches a poor person with income to figure out ways to get out of such situation, yet surely poor people can get lured into getting nice things and to not spend enough time learning stronger forms of cashflow management and including finding a good investment, such as bitcoin.
In various threads on the form, members have frequently discussed at various points that both poor people and rich people can develop good or bad cashflow management skills and practices. They are not difficult to learn or to employ, even though many folks will not try employ good practices which also help them in learning how to get better in their cashflow management practice with their experiences.
Many of us likely realize also that there are even cases in which poor people are able to surpass rich people in their level of wealth and/or their level of success or at least directionally poor people might sometimes be gaining in their wealth while rich people are losing in their level of wealth based upon their cashflow management practices, their investments and/or their efforts to learn from their experiences.
Maybe this comes down to the ability to resist and postpone. For some people, who knows, maybe brain chemicals come into play and they can't stop spending, making the wrong decisions, undermining themselves in the process of building wealth over time, which, in all honesty, is not an easy thing to do depending on the circumstances.
It reminds me of losing weight or eating healthy. Almost everyone knows that eating less or less calorie dense foods leads to weight reduction, but it is not the knowledge, it is the ability to execute. This ability to execute could suffer from a couple of factors and for some people it is easier, for some it is harder. To resist short term pleasure is quite certainly connected to brain chemistry. Some people are not exactly wired to be able to handle temptation very well. Wrong brain chemistry interferes heavily with proper long term planning.
In finance this could play out in both ways and let's use bitcoin as an example. In a volatile environment, the temptation to sell when bitcoin turns red is bigger for some people than for others. The temptation to sell when it is up 5x or 10x is again bigger for some people than for others. I believe, and your opinion would be interesting here, that the ability to resist selling in times of negative prices and the ability to resist in times of positive prices is lower for the same kind of people. This means there is a category of people that is limited in the magnitude of the ability to resist selling in both directions, narrowing down their scope tremendously to build a portfolio over time. They feel more fear when it goes down and rather sell, and they feel more urge to take profit when it goes up. Now I was only talking about selling, include buying into that equation and you see how complex it can become for some people, not for all of course.
There are of course other categories and you have those who never sell, but not because they are building their BTC stash confidently or rationally, but because they are greedy. In the case of bitcoin this would have paid off most of the time, but this is because of the unprecedented upside potential bitcoin brought about. In the shit coin era in 2017 some people did the same and they lost it all while they felt rich on paper. That is why building wealth over time for the "never sell because of greed" category could run into problems as well if they play the same game with other assets.
To sum this up, I think it is not the rules or principles that people don't understand most of the time, but their own psyche that makes them deviate from the plan. I think we all have an area in life where we can empathize with that.
Last but not least and this is bitterly true, there is also a lot of stupidity in laziness in finance. I didn't want to exclude this in any way.
But I wanted to add to the spectrum that I believe for some people it is really hard because of the way they are wired for whatever reason.