[Book Sip] Confidence Becomes a Trend and Influences the Economy

Editor's NoteSome sentences encapsulate the entire content of a book, while others immediately resonate with readers and create a point of connection with the book. Here, we introduce such meaningful sentences excerpted from books.

This book provides concrete evidence for the vague perception that human psychology influences the economy. The author, who has analyzed human psychology in financial markets for decades, focuses on the consistent presence of 'confidence' behind macroeconomic indicators. The book provides a detailed guide on how to measure confidence and how to apply it in practice. The author emphasizes that confidence is not merely an emotion, but a signal that can predict the flow of social change. By re-examining psychological factors that have often been overlooked in decision-making, the book offers criteria for making strategic judgments in uncertain environments.

To have confidence, one needs a sense of certainty and control. (...) The feelings of certainty and control form the foundation of decision-making not only in business, investment, and politics, but also in personal life. These two variables influence our emotions and actions. (...) By understanding how certainty and control drive behavior, we can predict trends, achieve better outcomes, and recognize when to trust or override our instincts. In other words, we can better understand a world that often feels overwhelmingly chaotic. -p.14

At the end of January 2020, Billie Eilish unexpectedly swept the Grammy Awards, surpassing strong contender Taylor Swift. This was as noteworthy as the economic lockdown decisions made by Italian policymakers during the same period. At first glance, these two events may seem unrelated, but both can be seen as important reflections of declining confidence. Music selection reflects mood. Like Justin Timberlake and other artists who perform best when market confidence is high, Taylor Swift achieved her greatest success during periods of strong market sentiment. Billie Eilish's meteoric rise and immense popularity signaled the emergence of indie music, but beneath this trend lay signs that consumer sentiment was already deteriorating. -p.20

Outstanding business leaders must know the exact position of others within a quadrant, the reasons they are there, and where and how they will move next. When a major product defect occurs and customers find themselves at the center of tension, business leaders must act like emergency room doctors, quickly assembling teams and focusing on restoring confidence. The success of both leaders and teams depends on their ability to swiftly assess the level of confidence in a given situation and respond accordingly. -p.57

When confidence peaks, people plan glamorous trips to faraway places with unfamiliar people and cultures, years in advance. Choices made in a state of abundant confidence are based on a much deeper conviction than simply accumulating wealth. They are driven by a belief that, in the future, no matter where in the world?even landing in space?they can maintain a high degree of certainty and control. (...) This description of personal travel planning also applies broadly to business planning. Companies and shareholders who reach peak confidence within their comfort zones experience a sense of complete clarity, believing that anything is possible, anywhere. -p.128

I go through this process every time I deal with investors. For example, when there is indiscriminate selling, it is clear that the parties involved are convinced that stock prices will fall. When stories about selling are widely spread and discussed on Twitter and other social media platforms, it indicates that investor sentiment is quickly approaching a low point. When everyone feels the urge to sell their stocks, I recommend doing the exact opposite. Well-publicized selling and feature articles highlighting a 'chaotic market' provide significant advantages to buyers. Although such moments may feel uncomfortable, they are ideal times to take on more risk. -p.341

Seeing What Others Don't | Written by Peter Atwater | Translated by Song Iru | Wisdomhouse | 384 pages | 23,000 won