"History never repeats itself; man always does." — Voltaire
Have you ever seen a friend buy an iPhone on EMI even though their salary is low? Or perhaps you know an uncle in your family who keeps lakhs of rupees in a Savings Account (earning 3%) but is scared to invest a single rupee in the Stock Market?
It’s easy to judge them. We look at their decisions and think, "That’s crazy! The math doesn't make sense."
But in the very first chapter of The Psychology of Money, Morgan Housel teaches us a lesson that changes everything: Money is not Math. Money is Emotion.
In this post, we will decode the "No One Is Crazy" rule and understand why smart people do "stupid" things with their money—especially in the Indian context.
1. The 0.00001% Rule
We all like to believe that we make financial decisions based on logic, Excel sheets, and news reports. But the reality is different.
"Your personal experiences with money make up maybe 0.00000001% of what's happened in the world, but maybe 80% of how you think the world works."
This means your view on money is shaped by when and where you were born. Let's look at an Indian example.
2. The Tale of Two Indian Generations
Let's compare your Father's generation with Your generation to understand why you fight about money.
Generation A: Born in 1960s-70s (The FD Lovers)
Your parents grew up in an India where the economy was closed. The stock market was famous for scams (like the Harshad Mehta scam in 1992). Inflation was high, and jobs were scarce. To them, Safety is everything. They trust Fixed Deposits (FDs) and Gold because they saw people lose fortunes in the market. They are not crazy; they are survivors.
Generation B: Born in 1990s-2000s (The SIP Investors)
You grew up in a digital India. You saw the post-2020 bull run where the Nifty doubled. You can invest in mutual funds with one click on apps like Zerodha or Groww. To you, keeping money in a bank feels like losing money. You are not crazy either; you are a product of a growing economy.
When you fight with your parents about investing, remember: No one is crazy. You are just looking at the world through different lenses.
3. The "Dream 11" & F&O Paradox
In the US, poor people spend heavily on lottery tickets. In India, we see a similar trend with F&O (Futures & Options) Trading or fantasy gaming apps like Dream 11.
Data shows that 9 out of 10 F&O traders lose money. Why do people still do it? Are they stupid?
No. Try to see it from their perspective:
- They can't afford a house (Real Estate is too expensive).
- A 10% return on Mutual Funds won't change their life quickly.
- They feel "stuck" in a low-paying job.
A risky trade or a lottery ticket is the only time they can buy hope. For a few minutes, they get to dream of a life that wealthy people take for granted. It is not "bad math"; it is a desperate search for a way out.
Why This Matters in 2026
In 2026, the pressure to "look rich" is higher than ever due to Instagram and LinkedIn. We see 20-year-olds posting about their crypto gains or new cars.
This creates "Envy-Driven Spending." You might buy that expensive watch not because you need it, but because you want to signal that you are "winning" too. Understanding that spending money to show people how much money you have is the fastest way to have less money is the most important skill you can learn this year.
Key Takeaways
- Don't Judge: People do crazy things with money, but no one is crazy. Everyone has a reason based on their past.
- Know Your Bias: Are you afraid of stocks because of a past loss? Or are you too aggressive because you got lucky once?
- Money is Personal: What works for Warren Buffett might not work for you. Find a strategy that lets you sleep at night.
Frequently Asked Questions (FAQ)
Q1: Why do smart people lose money in the stock market?
A: Because IQ has nothing to do with financial success. Emotional control (patience, fear management) matters more than intelligence.
Q2: Is it wrong to keep money in FDs?
A: No. If FDs give you peace of mind and help you sleep better, then it is the "right" investment for you, even if the returns are lower.
Q3: How can I stop making emotional money decisions?
A: Create a system (like an automated SIP). Automation removes emotion from the equation.
Up next: Lesson 2 – Luck & Risk (Nothing is as good or as bad as it seems).
📚 Credit & Disclaimer:
This post is a summary based on the bestseller "The Psychology of Money" by Morgan Housel.
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