The Unpredictable Nature of Financial Psychology

Beginner

Task 1: Listen for Key Information

Listen to the video and write down the answers to these questions with a short phrase or a single word.

1. What is the example given of something “crazy” people with low income do with their money?
2. What is the name of the author who wrote about Black Swans?
3. What does the speaker say is the “worst of the seven deadly sins”?

Task 2: Answer Simple Questions

Listen to the video and choose the correct answer.

1. According to the video, why do low-income households spend a lot of money on the lottery? a) They have a lot of extra money. b) They are buying into a dream of a better life. c) They don’t know how to save money.
2. What is the main advice given about investing and unforeseen disasters? a) Try to predict what will happen. b) Be prepared for them. c) Buy more stocks after a crash.

Task 3: Follow the Numbers

Listen for the numbers in the video and write down what each number represents.

• $400: __________________
• four: __________________
• 1/4th (one-fourth): __________________
• 20 years: __________________
• three: __________________

Intermediate

Task 1: Listen for Main Ideas

Listen to the video and summarize the main idea of each of the three “takeaways” discussed.

• Takeaway #1 (Different Perspectives): How can understanding different perspectives help you as an investor?
• Takeaway #2 (Black Swans): What is a Black Swan event, and how should you deal with them?
• Takeaway #3 (Seduction of Pessimism): Why are we more attracted to pessimistic stories than optimistic ones?

Task 2: Listen for Specific Details

Listen to the video and answer the questions with complete sentences.

1. What are the three characteristics of a Black Swan event?
2. How much more do low-income households spend on the lottery compared to the highest income group?
3. What is the difference in returns between an investor who stayed in the market and one who missed the four best days?
4. According to the video, why do pessimistic stories receive more attention?

Task 3: Sentence Completion

Listen to the video and complete the sentences with the missing information.

1. Understanding different people’s perspectives can help us to say no more easily to investments that are outside our own __________________.
2. It’s more useful to prepare yourself both mentally and financially for a disaster which you cannot __________________.
3. We all know that the pessimistic person sounds so very __________________ and the optimist sounds __________________ in comparison.
4. Progress rarely happens __________________, but setbacks often do.

Advanced

Task 1: Listen for Implicit Meaning

Listen to the video and explain the deeper meaning behind these statements, based on the context.

• “My card to play.”
• “Losses loom larger than gains.”
• “The world is better than you think.”

Task 2: Note-Taking and Analysis

Listen to the video and take notes on the main concepts presented. Afterward, write a brief analysis of how the speaker uses personal anecdotes (like not being a trader) and historical examples (like Black Monday) to make the abstract financial concepts more understandable and relatable.

Task 3: Analyze the Language

Listen to the video and focus on the vocabulary and phrases used.

1. Explain what the phrase “shrug your shoulders and not think twice about it” means in the context of the video.
2. What is the speaker’s tone throughout the video? Is he formal or informal? Is he trying to teach or to persuade?
3. The speaker uses rhetorical questions at the beginning of some sections. Identify two of these questions and explain how they serve to engage the audience.

Beginner 

Task 1: Matching

Read the sentences about the video and match the first part of the sentence to the correct second part.

1. People with different backgrounds have
2. Low-income households buy a lot of
3. A Black Swan event is impossible to
4. Pessimistic people sound
5. Progress happens much

Sentences: a. lottery tickets. b. foresee. c. different perspectives. d. slower than setbacks. e. intelligent.

Task 2: True or False

Read the following sentences. Write “T” if the sentence is true or “F” if it is false, based on the video.

1. People with high incomes buy more lottery tickets.
2. A Black Swan event has an extreme impact.
3. The S&P 500 lost all of its value in a single day in 1987.
4. Losses are more powerful than gains.
5. Optimistic stories about the future are usually dramatic.

Task 3: Vocabulary and Definitions

Read the following words from the video and match them to their simple definitions.

• beholder:
• outlier:
• foresee:
• intriguing:
• naïve:

Definitions: a. to see something before it happens. b. a person who looks at something. c. a person who is too trusting or inexperienced. d. something that is very different from others. e. something that is very interesting or curious.

Intermediate

Task 1: Read for Specific Details

Read the video and answer the following questions with details from the text.

1. What are some of the reasons given for why low-income households buy so many lottery tickets?
2. What is the main difference between the investment goals of a billionaire and a regular person?
3. According to the video, what are two reasons why we listen to pessimists more carefully?
4. What is the main advice given to investors regarding unforeseen disasters?

Task 2: Find the Quotes

Read the video carefully and find the quotes that match the descriptions below.

1. The quote that says what the author Morgan says about different perspectives.
2. The quote that defines a Black Swan.
3. The quote from the author of Thinking Fast and Slow.
4. The quote that talks about what you should and should not risk.

Task 3: Summarize a Takeaway

Choose one of the three “takeaways” from the video and write a short paragraph (4-5 sentences) summarizing it. Explain the main idea and use one of the examples provided in the video to support your summary.

Advanced 

Task 1: Analyze Text Structure

Read the video and analyze its structure. Answer the following questions.

1. How does the speaker use an everyday example (lottery tickets) to introduce the complex idea of different perspectives and values?
2. What is the purpose of the “Black Monday 1987” scenario? How does it serve to make the abstract concept of a Black Swan event more personal and impactful for the reader?
3. How does the structure of “Takeaway number five” mirror the concept it is explaining? (i.e., presenting pessimism first, then optimism).

Task 2: Critical Reading and Interpretation

Read the video and write a short response to the following questions.

1. The video states that “human nature fools us into believing that we should have been able to know it would happen all along.” Explain this idea in your own words, and provide an example of a recent event that people retrospectively claim they “knew” was coming.
2. What does the phrase “circle of competence” mean in the context of investing? Why is it important to stay within it?
3. The video argues that progress is a “much slower” process than setbacks. Do you agree with this claim? Use evidence from the text and your own knowledge to support your answer.

Task 3: Vocabulary in Context

Read the video and explain the meaning of the following words as they are used in the text.

• trajectory (Paragraph 1)
• suboptimal (Paragraph 2)
• convincingly (Paragraph 3)
• volatility (Paragraph 6)
• asymmetric (Paragraph 5)

Beginner 

Task 1: Fill in the Blanks

Read the following sentences about the video and fill in the blanks using words from the video.

• The lowest income households spend more than __________________ per year on the lottery.
• The Great Depression and World War II were examples of __________________
• A black swan is an event that is an __________________.
• We tend to listen to __________________ more carefully.
• __________________ is the worst of the seven deadly sins.

Task 2: Write a Short Description

Write a short paragraph (3-4 sentences) explaining why people with low incomes buy lottery tickets. Use information from the video to describe their perspective.

Task 3: Write a Sign

Imagine you are a financial advisor. Write a sign for your office. The sign should give a simple piece of advice from the video, such as “Don’t risk what you have and need for what you don’t have and don’t need.”

Intermediate 

Task 1: Summarize a Takeaway

Choose one of the three “takeaways” from the video and write a short paragraph (4-5 sentences) summarizing it. Explain the main idea and use one of the examples provided in the video to support your summary.

• Takeaway #1 (Different Perspectives)
• Takeaway #4 (Black Swans)
• Takeaway #5 (The Seduction of Pessimism)

Task 2: Write a Journal Entry

Imagine you are an investor during the Black Monday market crash of 1987. Write a journal entry about how you feel and what you are considering doing with your investments. Explain how the video’s advice to “weather the storm” might apply to your situation.

Task 3: Write a Short Blog Post

Write a short blog post titled, “Why are we afraid of good news?” Explain why, according to the video, we are more interested in pessimistic stories than optimistic ones. Use the concepts of evolutionary traits and loss aversion.

Advanced 

Task 1: Write a Persuasive Essay

Write a short essay (2-3 paragraphs) arguing for or against the statement, “Crazy is in the eye of the beholder.” Use the example of lottery tickets and other ideas from the video to support your argument.

Task 2: Write a Letter to a Friend

Write a formal letter to a friend who is new to investing. Advise them to be careful about taking investment advice. Explain the “seduction of pessimism” and the importance of preparing for “Black Swan” events. Use the concepts and vocabulary from the video to make your advice clear and compelling.

Task 3: Analyze and Respond

The video discusses a number of paradoxes related to money and human psychology. Write an analysis of one of these paradoxes. For example, analyze the paradox that losses are more powerful than gains, or the idea that we should prepare for disasters that we cannot foresee. Explain the paradox and then offer a response to the speaker’s claims, using your own ideas and experiences.