Shadowing Practice: The Psychology of Money in 20 minutes - Learn English Speaking with Video
Loading...
1
Money.
2
Some have it, some don't.
3
Some have mastered it, but most are still chasing it.
4
You may think of money as just numbers and spreadsheets and math, or an equation that needs to be solved.
5
But the real financial decisions are made far away from calculators, around dinner tables with ego, pride, fear and personal history.
6
The true nature of money is the dance between the cold arithmetic of a spreadsheet and human nature.
7
When it comes to money, we are complicated creatures and financial success is not so much about how much you know, know, but how you behave.
8
This video was inspired by Morgan Housel's amazing book, The Psychology of Money.
9
Let's delve into the strange and human side of money.
10
Your financial DNA.
11
You aren't crazy.
12
We all come from different generations with parents earning different incomes and holding different values living in various parts of the world,
13
born into different economic environments with varying incentives and varying opportunities.
14
We all have very different experiences towards money.
15
Take for example the stock market and inflation.
16
People born in 1970 saw an almost tenfold increase in the S&P 500 during their teens and twenties,
17
leading most to have a positive view of the stock market and a higher inclination to invest.
18
People born in the 1950s, however, saw the stock market go nowhere in their teens and twenties, leading to a more negative view of the stock market and less inclination to invest.
19
People born into the 1960s experienced significant inflation during their teens and 20s, leading to a higher awareness and a more negative view of inflation and its effects.
20
People born in 1990 experienced relatively low inflation during their lifetime, leading to less concern and awareness of its effects.
21
A person's experience with the stock market
22
and inflation during their formative years greatly shapes their attitudes and behaviors towards investing and financial decision-making.
23
People justify every financial decision they make based on the information they had at
24
that moment and their mental model of the world, which has been passed on to them from their parents and is shaped by their unique life experiences.
25
Although they can be misinformed, lack information or make bad decisions, their actions make sense to them in that moment and align with their own personal story.
26
According to Housel, people do some crazy things with money, but no one is crazy.
27
We all have unique worldviews and since there is no universally correct way to manage money successfully, none of us are crazy.
28
We make financial decisions based on our personal life experiences and our worldview.
29
Financial decisions are often not made purely on logical or mathematical grounds, but are shaped by your unique experiences and worldview.
30
Be wary of one-size-fits-all financial advice, as what may seem irrational to others could make perfect sense to you.
31
Compound Kings There is no doubt that Warren Buffett is considered one of the greatest investors of all time.
32
What is staggering is that $81.5 billion of Warren Buffett's $84.5 billion net worth was earned after he reached his mid-60s.
33
Hussle explains that few pay enough attention to this simplest fact.
34
Buffett's fortune isn't due to just being a good investor, but being a good investor since he was literally a child.
35
As a result of investing from the early age of 10, Buffett was able to harness the power of compounding.
36
So what is compounding in a nutshell?
37
Let's say you invest $1,000 at an interest rate of 8%.
38
Your initial investment would earn you $80 after one year.
39
If you compounded your total of $1,080 at 8% interest the next year, you would now earn $86.4.
40
You've earned money on your initial investment as well as the interest you earned on the principal.
41
An investment compounded over time gains interest not only from the original investment, but also from the interest generated on top of the original investment.
42
The counterintuitive nature of compounding makes many of us not realize how extreme the results can be.
43
Warren Buffett began seriously investing at the age of 10 and had a net worth of $1 million by the age of 30.
44
Let's imagine an alternate reality where Warren Buffett behaved more like most young men in their 20s
45
and used a lot of his early income on traveling and a few nice cars.
46
If he started with a net worth of $25,000 at the age of 30 and retired at 60,
47
but continued to generate the amazing returns that he does of around 22% annually, his net worth today would be around $11.9 million,
48
which is 99.9% less than his actual net worth today of $84.5 billion.
49
Warren Buffett's financial success can be attributed to the financial base he built in his early years and his longevity in investing.
50
His skill is investing, but his secret to success is time and the power of compounding.
51
Consider this from another perspective.
52
The richest investor of all time is Warren Buffett.
53
However, in terms of average returns, he is not the greatest.
54
Jim Simons, for instance, is a hedge fund manager who has compounded money at a staggering 66% annually since 1988, a much higher rate than Buffett.
55
The net worth of Simons, however, is $21 billion, which is 75% less than Buffett's.
56
How is this possible?
57
According to Housel, the reason for this is
58
that Simons wasn't able to find his stride in investing until he was 50 years old, effectively giving him less than half as many years to compound as Buffett.
59
Housel estimates that if he had invested over a time frame as long as Buffett, his net worth today would be 63 quintillion,
60
900 quadrillion, 781 trillion, 780 billion, 748 million, 160 thousand dollars.
61
It's important not to underestimate the power of compounding.
62
No matter how counter-intuitive the results of compounding may seem, they should never be ignored.
63
People often focus on short-term gains, overlooking the long-term impact of compounding.
64
Understanding and leveraging the power of compounding is crucial for long-term financial success.
65
It's not about making quick high returns, but about consistent long-term growth.
66
Pessimism and money.
67
Optimism is a belief that the odds of a good outcome are in your favor over time, even if there are setbacks along the way.
68
But when it comes to money, we all have a bias towards pessimism that we hold dear in our hearts.
69
Looking back, however, things have generally improved over the years.
70
So what is it about pessimism that we are inclined to embrace rather than optimism?
71
The answer is because good things take time and don't happen overnight.
72
Money is a subject that attracts pessimism for a variety of reasons.
73
Let's start with the fact that money matters to all of us.
74
When we hear about something bad happening in the economy, we're more likely to pay attention.
75
For example, a 40% decline in the stock market over six months is likely to attract attention immediately
76
and may even attract government intervention.
77
However, the incremental nature of a 140% gain over six years can go largely unnoticed.
78
Every year, half a million Americans are saved by the progress of medicine over the last 50 years.
79
Slow progress, however, attracts less attention than quick, sudden losses, such as terrorism, plane crashes, and natural disasters.
80
There are many overnight tragedies, but few overnight miracles.
81
To be practical, we don't have to be pessimistic.
82
Despite setbacks, we can hold on to the belief that over time, the odds of a positive outcome are in our favor.
83
When watching the news highlighting a stock market crash, economic woes, or other money problems, try to remember that things tend to improve over time.
84
Don't let the allure of pessimism cloud your judgment.
85
A balanced reality-based optimism, viewed over a longer time horizon, is often more rational for long-term success, and can reveal opportunities you would miss with a pessimistic outlook.
86
Two Forgotten Elements In 1968, there were roughly 300 million high school-age people in the world,
87
and of those 300 million, 300 students attended a small school in Seattle called Lakeside.
88
Lakeside happened to be the only high school in the world at the time
89
that had a professor with the foresight to lease a computer, the Teletype Model 30.
90
This was no ordinary computer.
91
It was advanced for the time, and the type of computer that even graduate students didn't have access to.
92
And for one lucky student at Lakeside, this would change everything.
93
That student was Bill Gates.
94
From 300 million down to 300.
95
So in 1968, there was roughly a 1 in a million chance of being a high school student with access to a computer.
96
Bill Gates and his schoolmate Paul Allen would go on to create Microsoft together.
97
Even as a teenager, Gates showed exceptional intelligence, hard work, and a vision for computers unlike anyone else.
98
But going to Lakeside also gave him a one-in-a-million competitive advantage and head start.
99
And Gates is not shy about this.
100
In 2005 he said, If there had been no Lakeside, there would have been no Microsoft.
101
What is not often mentioned in the early Microsoft story was
102
a third member of this gang of high school computer prodigies, Kent Evans.
103
Just as intelligent, just as visionary.
104
Kent could have very well been one of the founders of Microsoft alongside Gates and Allen.
105
However, that would not happen.
106
A mountaineering accident took Kent's life before he graduated high school.
107
The odds of a high school student being killed in a mountaineering accident are around one in a million.
108
Just as the extremely rare stroke of luck would propel Bill Gates and Paul Allen to great success,
109
Kent Evans would experience an extremely rare event with an encounter with what Housel calls the close sibling of luck, risk.
110
Luck and risk are like the winds and the waves that determine the course of a sailboat.
111
The sailor can control the rudder and the sails, but ultimately the direction and speed of the boat are influenced by external factors that cannot be fully predicted or controlled.
112
The pursuit of success is full of twists and turns, and the role luck and risk play in shaping our lives is an important perspective to keep in mind.
113
Understanding that success is a complex combination of factors, including both talent and luck, can help us approach our own financial decisions with greater humility and perspective.
114
Be cautious in attributing your own successes or failures solely to your own actions.
115
Acknowledge the roles of luck and risk.
116
When learning from others, try to emulate broad patterns you encounter as opposed to extreme individual examples
117
that often involve a high degree of luck or risk.
118
These extreme cases are not easily replicable.
119
The Key to Happiness People want to become wealthier to make themselves happier,
120
but according to Hussle, the key to happiness is the ability to do what you want, when you want, with who you want, for as long as you want.
121
The pursuit of material wealth has led to many people working harder and giving up more control over their time, despite being richer than ever before.
122
However, studies show that having control over your life is the most dependable predictor of positive feelings of well-being, more than your salary, house size, or career prestige.
123
Ultimately controlling your time is the highest dividend money pays.
124
Pursuing money without valuing time is like filling a bucket with a hole in it.
125
No matter how much water you pour in it, it will continue to leak out.
126
Similarly, no matter how much money you accumulate, it won't bring lasting happiness if you don't have control over your time and can't enjoy the fruits of your labor.
127
Prioritize gaining control over your time when considering how to use or invest your money.
128
The freedom to do what you want when you want is often more valuable than any material possession.
129
Tale Events Heinz Berggruen, a man who fled Nazi Germany and settled in America,
130
became one of the most successful art dealers of all time.
131
He collected a massive amount of art, including works by famous artists like Picasso, Clee, and Matisse.
132
In 2000, he sold part of his collection for over 100 million euros.
133
But what was his secret to acquiring so many masterpieces?
134
Was it skill?
135
Was it luck?
136
According to Horizon, a research firm, great investors buy vast quantities of art and hold onto them for a long period of time.
137
They wait for a few of those paintings to become well known and worth a lot of money, even though most of the paintings they bought were not worth very much.
138
In other words, it's not about being right all the time, but having a diversified portfolio and waiting for just a few winners to emerge.
139
Perhaps 99% of the work someone like Berggruen acquired in his life turned out to be of little value.
140
He could be wrong most of the time, but that doesn't particularly matter if the other 1% turns out to be the work of someone like Picasso.
141
These events are known as long tales, when a small number of events can account for the majority of outcomes.
142
The long tales of Berggruen's art collection are what led to his ultimate fortune.
143
The story of Berggruen teaches us a valuable lesson about investing, and this long-tail concept also applies to many aspects of business and investing.
144
The obvious example is venture capital.
145
Most of the startups in a VC fund will fail and lose money for the fund, but all they need are a few outlier startups, which make 20x returns to make up for these losses.
146
Take Amazon for instance, in 2018 it drove 6% of the returns on the S&P 500, even though it is just one company.
147
And if we look inside Amazon, its growth was largely driven by two tail events, Amazon Prime and Amazon Web Services.
148
These two products alone more than made up for all of Amazon's less successful experiments, such as the Fire Phone or travel agencies.
149
After the disastrous release of the Amazon Fire Phone, rather than apologizing to shareholders, Jeff Bezos said, If you think that's a big failure, we're working on much bigger failures right now.
150
I'm not kidding.
151
Some of these are going to make the Fire Phone look like a tiny little blip.
152
Bezos understands that it's okay to make mistakes and fail with most products
153
if the process creates the 1% of tail event products that drive everything.
154
Tail events are mostly unintuitive and hidden from us
155
because we only see the finished products and not all the failures along the way that led to that finished product.
156
Hussle in the book uses a real-life example of a stand-up comedian.
157
When you're watching the Netflix special, you're probably saying to yourself, wow this comedian is amazing and hilarious.
158
But what you aren't seeing are all the trial
159
and error failed jokes that the comedian tried out in small clubs all around the country before doing the special.
160
The Netflix special is the 1% compendium of all the tale event jokes that actually made people laugh.
161
99% of the jokes along the way were probably just okay.
162
When it comes to investing, even though long tales are prevalent, most of us ignore them.
163
When things go wrong, we tend to overreact.
164
As soon as you accept that tails drive everything in business, investing and finance, you realize lots of things may go wrong, fail or fall apart.
165
Remember, out of nearly 500 stocks Warren Buffett has picked, only 10 have made the majority of his money.
166
Good stock pickers will only be right half of the time.
167
Good leaders will only make good decisions half of the time.
168
The fact that you might be wrong sometimes doesn't mean that things won't work out over time.
169
In the end, the outcome can be determined by only a small number of events.
170
In investing in business, don't sweat frequent failures or average results.
171
Success often hinges on a few major wins or tail events that outweigh your losses.
172
True Wealth vs. Being Rich It's so important to understand the difference between being rich and being wealthy.
173
Richness is about your current income and the things that you own, while wealth is about the financial assets that you have yet to spend.
174
True wealth isn't what you see but what you don't.
175
It's easy to assume that someone driving a Lamborghini is wealthy, but appearances can be deceiving.
176
In reality, many individuals are living beyond their means and relying on debt to fund their flashy lifestyles.
177
Wealth isn't about the cars you drive, the diamond rings, or the homes you own.
178
It's about those financial assets that you have yet to spend.
179
Accumulating wealth takes self-control and restraint.
180
The diamonds, watches, and first-class upgrades that you decline all contribute to your overall wealth.
181
It's easy to find rich role models who spend lavishly, but true wealth is hidden and therefore harder to imitate.
182
We're conditioned to believe that having money means spending money, but the real key to building wealth is to save and invest the money you have.
183
In fact, the only way to be wealthy is to not spend the money that you do have.
184
The next time you see someone driving a fancy car or living in a big house, remember you can't judge wealth by appearances alone.
185
The true key to wealth is self-control, restraint, building assets, and investing in your future.
186
Aim for long-term financial security by accumulating valuable assets.
187
Rather than equating wealth with material possessions like flashy cars and luxury goods, focus on building true wealth, not just the appearance of being rich.
188
The Real Price Imagine you're climbing a mountain with the goal of reaching the peak and admiring the amazing view.
189
Maybe you will get sunshine that day, maybe rain.
190
You may get lost, you may fall
191
and injure yourself the difficulty of the climb is not always apparent until you're in the thick of it.
192
From the ground looking up, the path to take may seem obvious, but along the way you will certainly need to reassess and change your path to the peak.
193
You are under no illusion, however, that there will be some golden escalator that will safely take you to the peak.
194
You understand before the climb that this uncertainty
195
and risk is just the price you have to pay to get to the top.
196
But when it comes to investing in the stock market, many people think they can avoid that uncertainty and risk and get something for nothing.
197
Household likens the stock market to getting a new car.
198
If you want to get a new car, you have three options.
199
You can buy a new car, buy a used one, or you can steal one.
200
The new car is a higher price, but the reward is greater.
201
Think of the new car like aiming for 12% returns from the stock market.
202
The used car is cheaper, but also comes with less reward.
203
The used car is a much safer investment, but only returns 4% per year.
204
Stealing a car is like trying to get something for nothing.
205
99% of people would avoid stealing the car because the consequences outweigh the benefits.
206
However, when it comes to the stock market, people seem to be under the impression that they can take option 3 and steal from the market.
207
They try all kinds of tricks and strategies to get good market returns without paying the price.
208
Attempting to sell right before the dip or buy before a boom.
209
Consider for example wanting to earn an 11% return over 30 years in preparation for your retirement.
210
From 1950 to 2019, the Dow Jones Industrial Average has returned about 11% per year.
211
Over those 69 years, however, of course, there have been many high highs and low lows.
212
For many, the sight of their investment going up and down can be dramatic, so they try to get in and out quickly without paying the price of volatility and uncertainty over the long term,
213
akin to trying to steal the car.
214
The price you must pay is not just about dollars or cents when investing.
215
It's about accepting the emotions that volatility, fear, and risk can bring.
216
Recognizing that successful investing comes with a price is crucial.
217
The price is not immediately obvious, but you have to pay it, just like you would for any other product.
218
The key is to convince yourself that the market's fee is worth it, and it's an admission fee worth paying.
219
There's no guarantee that it will be, but if you see the admission fee as a fine, you'll never enjoy the experience.
220
Be willing to pay the price once you find it.
221
market volatility as an admission fee for the potential of higher returns rather than as a fine for doing something wrong.
222
This mindset will help you stick with your investment strategy for longer time periods and during tough times.
223
Hedonic Treadmills Enough.
224
No one enough is enough.
225
Become familiar with the concept of hedonic adaptation or the hedonic treadmill.
226
Every time you hit the goal you keep moving the goalpost further ahead.
227
You You need only look at the demise of Bernie Madoff and Gupta, two men who already had everything and were ultra-wealthy, but all the money in the world would never have been enough,
228
both resorting to crime to make even more money.
229
The pursuit of wealth and success without a sense of knowing when enough is enough is like climbing a never-ending ladder.
230
No matter how high one climbs, there is always another rung to reach for, and the pursuit can become all-consuming, leading to a lack of happiness and fulfillment.
231
Set a stable goal for what enough means to you.
232
Otherwise, rising expectations will keep you perpetually unsatisfied and prone to needless risks.
233
Be aware of the pitfalls of social comparison.
234
Instead of endlessly comparing yourself to others, focus on what truly brings you happiness and fulfillment.
235
Music
Understanding Money: A Real-Life Dialogue on Psychology and Habits
The video explores how our personal histories, emotions, and timing shape financial decisions—from how we invest to how we view money. It’s a relatable scenario: whether you’re saving for a home, investing in stocks, or just managing daily expenses, the psychology behind money affects everyone. This conversation is perfect for IELTS speaking practice because it covers complex ideas in clear, conversational language, helping you discuss abstract topics like "compound interest" or "financial biases" with confidence.
Useful Chunks & Collocations to Memorize
- "Harness the power of compounding" – A key phrase for discussing long-term investing, great for explaining financial growth in speaking tasks.
- "Shaped by unique life experiences" – Useful for describing how background influences behavior, applicable to IELTS topics like "personal values."
- "Bias toward pessimism" – Helps articulate emotional tendencies, perfect for discussing challenges in money management or decision-making.
- "Financial base built in early years" – A natural way to talk about foundational habits, relevant to conversations about success or planning.
- "Counterintuitive nature of compounding" – Ideal for explaining why people often underestimate long-term results, a strong point in analytical discussions.
Your Shadowing Challenge
Practice shadowspeak (repeating aloud while listening) with the section on Warren Buffett and compounding. Pause the video after each sentence, then repeat it, focusing on rhythm and stress—especially in phrases like "sixty-three quintillion nine hundred quadrillion." This improves fluency and helps you mimic natural speech patterns, critical for shadow speech success. After 5 minutes, record yourself summarizing the key points: "Buffett’s success comes from time, not just skill" or "Compounding works best with a long timeline." Compare your recording to the video to check clarity. This task builds both listening comprehension and speaking confidence, making it a great tool for learn English with videos practice.
What is the Shadowing Technique?
Shadowing is a science-backed language learning technique originally developed for professional interpreter training and popularized by polyglot Dr. Alexander Arguelles. The method is simple but powerful: you listen to native English audio and immediately repeat it out loud — like a shadow following the speaker with just a 1–2 second delay. Unlike passive listening or grammar drills, shadowing forces your brain and mouth muscles to simultaneously process and reproduce real speech patterns. Research shows it significantly improves pronunciation accuracy, intonation, rhythm, connected speech, listening comprehension, and speaking fluency — making it one of the most effective methods for IELTS Speaking preparation and real-world English communication.