With the improvement of life and the general increase of per capita income, various investment methods have appeared in the market, such as funds and stocks. These investment methods made some people become rich overnight, which attracted many people's attention, and people rushed to cast their eyes on these investments. However, it can't be ignored that not all investors have made a lot of money, and some even went bankrupt and lost everything. Therefore, in the face of these venture capital, whether you have money or not, you must be cautious.

We should be cautious in investment and rational in consumption. What is the correct way?

With the development of market economy becoming more and more perfect, rationality is particularly important for those business-related behaviors. Because only decisions made through rational thinking can be objective and maximize economic benefits.

for example, investment. Investment is a highly rational business behavior, which needs to be "carefully calculated" first. The so-called prudent calculation actually requires investors to make a cautious forecast before investing. The investment can be made only when the benefits are greater than the expenses, which is an estimate of the expenses of those upcoming behaviors and an estimate of the benefits that will be brought by the upcoming behaviors. Therefore, for those who are used to investing, they pay great attention to the gain and risk control.

Samuelson, a professor at Massachusetts Institute of Technology and a famous economist, once did this experiment. Once, he gambled with a colleague that if the coin was heads up, he would win $1,, and if it was tails up, he would pay the colleague $2,.

at first, it sounds like the bet is very beneficial to Samuelson's colleagues. Because as long as this colleague contributes $1,, there is a 5-5 chance of winning $2,. Of course, he also has a 5% chance of losing $1,. After this analysis, from the perspective of economics, the actual situation is this: its real expected income is 5 dollars, and the calculation method is 5% × 2+5 %× (-1) = 5.

Unexpectedly, this colleague flatly refused the bet that seemed to be in his favor. He said, "I won't bet with you because I think the loss of $1, is much more important to me than the gain of $2,. But if you throw it 1 times, I agree. " In other words, the point that Samuelson's colleagues want to express here is that it is difficult to get the result of the law of average I want once, but it can be done 1 times.

Someone once did an experiment about coin toss. The results of the experiment show that the probability of getting heads after 1, 1 and 1 throws is about 5%, but the difference is that when you throw it 1 times, the probability of getting heads is closer to 5% than when you throw it 1 times. This is the so-called law of average. That is, repeating this independent and unrelated experiment many times (the next result has nothing to do with the last result) can reduce the risk of the passive party, so Samuelson's colleagues are prepared to benefit steadily through this "law of average".

So, next, Samuelson's colleague put forward this betting rule: "Let's bet 1 times, and each time you bet $2 on my $1." In this way, Samuelson's colleague's portfolio risk is fixed, and his initial capital is greatly reduced, that is, at most, it is $5 (assuming that he is unlucky in the first 5 times, which is unlikely). We agree with Samuelson's colleague's practice and think it is his most sensible one. The reason is very simple. The rule he proposed is equivalent to spreading $5 to 1 identical and independent bets, so the risk of the portfolio will be approximately zero.

From this, we can see the extraordinary role of investment rationality in investment-greatly reducing the risk of investment. This is the difference between investment and gambling, because investment is a rational behavior after careful calculation. For those who are good at investing, they will never do things they are not sure about easily, which is why Warren Buffett has only invested in two products for a long time, one is Coca-Cola, and the other is the world's most famous razor.

because he knows that investing in these two brands is a shoo-in for himself, and the risk is almost zero. So every time he shoots, he will hit it. Therefore, he has a famous saying: investment is a gamble, a gamble that knows the result. The result he said here is very simple, that is, winning.

Therefore, "risk aversion" is the business philosophy of almost all investment masters. We often say that smart people never do blind things. By the same token, those successful businessmen will not control their funds rashly and spend blindly.

We have a saying in ancient times: "A gentleman loves money, takes it wisely and scatters it wisely."

In fact, it contains the concept of investment and consumption, because the "Tao" and "Fang" emphasized in it refer to the rational planning of investment and financial management.

So, what kind of investment can be called rational investment? According to the explanation of economics, rationality means that people have the characteristics of maximizing their own utility. Generally speaking, investors in the investment field are divided into three categories because of their different characteristics: the first category is risk averse; The second category is risk neutral; The third category is risk lovers. What a risk-averse person wants is a "stable" word. The rational performance of investment is as follows: if there is no excess return and risk premium, then no one will try to pull him into the water; The second kind of person-risk neutral person is not as extreme as the first kind of person. He only decides whether to make venture capital according to the expected rate of return, which belongs to the style of impartiality and static and dynamic. The third kind of people are completely different. Their purpose is: "Playing is the heartbeat." They regard risk as a pleasure and permeate their investment behavior.

according to a statistical data, most investors in reality are risk averse, but everyone has different degrees of risk aversion. Therefore, for most investors, the rational investment we define here is as follows: if there is more risk, there must be more income to compensate, and the risk and income should maintain a certain balanced relationship.

Of course, consumption rationality corresponds to investment rationality, but rational consumption is as difficult to grasp as rational investment. Theoretically speaking, the characteristic of personal consumption is that for a specific consumer, everyone's consumption will naturally be different according to their own characteristics, and the marginal utility of all consumer goods (including leisure) is equal. The so-called marginal utility refers to the new utility brought by consumers adding a unit of goods or services in a certain period of time, that is, the increment of total utility. In economics, utility refers to the ability of goods to satisfy people's desires, or, utility refers to the degree of satisfaction that consumers feel when they consume goods.

suppose consumers are asked to choose between bread and milk. If he eats too much bread, it means that he has reduced the marginal utility of bread (or even felt disgusted). The result of this can only be that this consumer will reduce the consumption of bread, but need to increase the consumption of milk until their marginal utility is equal. However, in real life, utility is just a personal feeling, so it is difficult to quantify it. There are many reasons, the most important of which is influenced by personal preference, which is not only difficult to compare, but also impossible to measure. However, due to the abstraction of measurement standards, it is difficult to be rational in consumption.

here is an interesting question about consumption rationality, that is, does the law of diminishing marginal utility apply to all goods, and is it a panacea? From the above analysis, it is obviously applicable to bread and milk, but what about money? The answer may not apply.

In addition, consumption rationality is also restricted by other aspects, such as "the assumption of completeness of choice". For example, if there are two items, A and B, then there will be three situations, that is, people think that A is better than B, or B is better than A, or both are equally good, and the fourth situation is impossible. If you choose what is good for you, you can say that your consumption behavior is rational. However, economist Amartya? In his book, Sen tells the story of "the donkey of Brittan" to question this "completeness" hypothesis.

This story goes like this: It is said that there was a donkey in Bridan, facing two piles of grass, because there was no way to choose which pile was better, and finally he starved to death. Obviously, it doesn't think A is better than B, and it doesn't think B is better than A, and it doesn't think both piles are equally good. So, what does it think? The answer is definitely that we don't know.

This illustrates a problem: in real life, there are many more possibilities than "theoretical argumentation". Everything in the world is complicated, which is not completely covered by theory.

rationality has always had such a characteristic that it is easier said than done. Because reason means the best choice, which is just like how to find the easiest path to achieve your goal in a forest with criss-crossing paths. In order to achieve this goal, you should not only have a deep understanding of your environment, but also be able to eliminate all kinds of external interference and put aside many illusions and temptations. In fact, rational consumption is also the same. Only by being unaffected by emotional cognition, starting from actual needs and trying to "audit and quantify" your consumption details can you be rational.