Animal spirits are a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.
Traders who can consistently make big money over the long run usually possess four sets of skills: mathematics, finance, psychology, and philosophy.
Mathematics shows them where the probabilities lie;
finance teaches them the rules of the game;
psychology enables them to master self-discipline;
and philosophy guides them to cope with uncertainty.
In essence, what trading truly teaches you is not just how to make money, but how to navigate a world full of unpredictability:
acknowledge that you will make mistakes,
accept that the world is beyond your full control,
place bets based on probability,
and stay calm no matter the outcome.
Unfortunately, major branches of psychology and psychiatry during this century have helped promote the notion that we are all in some sense victims—victims of insensitive parents, victims of poverty, victims of abuse, victims of implacable genes. Our state of mind, therefore, is someone else’s responsibility. This kind of psychology is very appealing to many academics. It gives them endless opportunities to pretend they know what makes an individual miserable and unsuccessful. It appeals as well to a lot of unhappy people. It gives them an excuse for their misery. It permits them to evade the responsibility for their own lives.
