Survival Through Collaboration In a thought experiment by Yuval Noah Harari, humans on an island with 100 people and 100 primates survive well due to collaboration. This is because they build collective beliefs, myths, and ideas that lead to social coherence. In contrast, the stock market requires being a rational contrarian rather than following herd behavior.
Myths in Stock Market Investing The Efficient Market Hypothesis (EMH) suggests markets are efficient most of the time but break down during crises like 2008 when opportunities arise for those prepared. Another myth is that large caps are less risky than midcaps or small caps; what matters more is understanding the business itself.
Human Evolution vs Investment Behavior Humans evolved to react quickly to danger for survival which doesn't align with investment needs requiring deliberate thinking based on data collection and analysis. Survivorship bias can mislead investors as it excludes companies no longer existing from analyses.
'Hedonic Treadmill' in Wealth Accumulation 'Hedonic treadmill' describes how achieving wealth leads individuals wanting even more instead of satisfaction causing conflict between economic rationality and emotional desires leading risk-taking behaviors influenced by physiological responses like dopamine release during bullish markets.