No 'Rational Investor' In Existence

There is this idea in economics, about markets moving along various force lines - the equilibrium of Supply and Demand, and the so-called 'rational behavior' or rational choice scenario. The idea for 'rational economic agent' comes from William Stanley Jevons around 1859.

Rational behavior in a wide human social sense, rational choosing, large groups of rational people. These things simply do not exist in reality.

Which of course does not restrain economists from modelling using these concepts.

Moreover, these fundamental ideas have all been subjected to a lot of alteration over time as new factors came to be considered: 'Demand' once simply meant people's propensity to need something, or want something, and this later on became strictly dependent on how much money they had at their disposal; 'Demand' thence, came to be just the level of money available, whether debt or pure free cash.

We all know the insidious characteristic of this new version of a definition of economic Demand - namely, that it has become normal for governments to function as the enablers of debt, debt now having become officially equated with Demand because it implies 'money' in this new definition.

Human economic systems and their understanding may not be divorced from the psychology of human behavior.

And we need to be particular that we are speaking of obtaining human behavior and not of human behavior as it ideally might be.

Yes humans might be rational, but they are not. We can see people attempting to explain that nevertheless the causes and reasons why someone does a thing is rooted in their own perception about that thing - yet I disagree. Recently, there have been news stories about some celebrities who spent atrociously large sums of money on cocaine - in one case 30 million dollars over just six months. And so we are told this is because of addiction. And so addiction becomes the reason, and thus, 'a' rational cause. 

But when we listen to what the person involved actually says, we find another thing: we see them say they no longer knew why they were doing what they were doing because cocaine posed no chemical attraction to them as it had earlier on. And I accept this. It is possible, in fact it is usual, for people to have no connection whatsoever in their minds between what they might find themselves doing, and any specific logical or rational reasons for doing it - these are automatic behaviors that they engage in.

"Life's Rich Tapestry"

One has to be very careful, as a thinking person, about words that become commonplace - and not assume we always know exactly their meaning as intended by those using them on us.

We are vended beliefs about words. And then all too readily adopt those vended meanings and base the actions of our lives upon such false meanings - with predictable results.

'Money' is conditional to how it is gained. 'Wealth' is conditional upon who else says it has been attained. 'Luxury' is marketed luxury. And marketing is successful or not, depending upon which celebrity with how large of a bank account, is addicted today, to whatever was being marketed a moment before... And then all the rest of the public follows along behind these examples of leadership and wealth truth.

You can't expect to 'see' ahead which companies' stocks will rise in the market, based on concepts about rational behavior that simply do not reflect what people do and especially, how they think, or that they think at all.

We are not all the same, who occupy this Earth, and who appear as intelligent living beings here.

And soon, we shall moving away in these posts and articles, from what will be considered standard discussion, to what I regard as having supreme importance and significance - and we shall see how this differs from what you are generally told about such things...