Supercharging Your Financial Bullshit Detector

Please excuse the language.

To me, the hardest part of writing isn’t the writing. It’s the editing. Specifically, the cutting. My ego believes every word is divine while my brain says most are crap. Deep down I know my work improves when I get the red pen and, as Stephen King incites, “kill my darlings.”

A diamond doesn’t become brilliant until it’s cut. But how do you identify what to toss in the trash heap? It’s a creative choice.

As the artist Austin Kleon writes: “In the end, creativity isn’t just the things we choose to put in, it’s the things we choose to leave out.”

Decisively leaving things out can improve our financial lives, too. Because financial planning is as much an art as a science. By that I don’t mean the more creative the solution to your financial needs the better. Rather, money is personal. What works for you, may not work for me. Wealth is in the eye of the beholder.

As a creative endeavor, financial success depends on knowing what to include as well as what to exclude; being able to separate good advice from bad advice; telling the truth from the bullshit.

A good bullshit detector can go a long way in making better financial decisions.

Following Sturgeon’s Law

In what is eponymously known as Sturgeon’s Law, science fiction writer Ted Sturgeon posited that 90% of everything is crap.

That may sound overly cynical, until you really think about it. Of the estimated 2,000,000+ books published each year, how many are worth reading? How many work meetings have you ever been happy to attend? How many emails in your inbox are important? How many hours do we waste scrolling through social media feeds?

Perhaps, Sturgeon underestimated.

Far from being an indictment of human intellect, Sturgeon’s Law is a personal liberation. It can free you from societal pressures to consume every new product, every piece of news, every new fad. Since the majority of everything is bullshit, you can peacefully tune out the noise and focus on what matters most.

Sturgeon’s Law extends to finance, as 90% is effectively bullshit, too. (I’m using the term bullshit liberally here. I mean information that is not only untruthful or deceptive but also irrelevant to someone who trying to achieve financial independence.)

90% of financial and investing advice is bullshit. You can build wealth by following a handful of timeless steps: spend less than you earn, try to max out your retirement account, avoid bad debt, etc. There is no need for complex financial products or elaborate investment strategies. As University of Chicago professor Harold Pollack showed, the best financial tips can all fit nicely on an index card.

90% of stock market performance is bullshit. What the stock market does on any given day rarely matters. A retirement guide from JP Morgan shows that subtracting just the 10 best trading days would cut the S&P 500’s return by more than half. That means most days are non-events. So, you can avoid trying to time the market. You can blissfully ignore most daily financial news. You can stop wasting time checking your account (as Nassim Taleb notes in Fooled by Randomness, you may have a 93% chance of seeing positive gains if you check your portfolio just once a year).

90% of financial marketing is bullshit. Any commercial with a mid-tier celebrity, or piece of direct mail, or YouTube video proclaiming high returns or instant debt relief is bullshit. Certainly, 90% of steak-dinner retirement seminars are traps to avoid. Most financial marketing is an attempt to convince you to allow someone else to make money off your money.

90% of our thoughts and feelings are bullshit. We shouldn’t apply Sturgeon’s Law to only the external world when our internal thoughts and feelings also lead us astray. We are susceptible to cognitive biases that warp our thinking. Our feelings feed irrationality. I know for me, 90% of my ideas are bullshit, 90% of things I want to buy won’t make me happy, 90% of my fears are over nothing, and 90% of my strongest feelings will pass if I just simply pause. Harsh but true. I take comfort in knowing that. A greater self-awareness can help you make better decisions and avoid costly mistakes.

When you internalize Sturgeon’s Law, your financial life becomes easier to manage. It’s a wonderful tool for choosing what not to include. It allows you to brush aside most news, sales pitches and worthless information. And your financial goals seem more possible when the necessary steps to achieve them are reasonably within your control.

Sturgeon’s Law saves a lot of time and effort. It helps you say “no” to all the wrong things, which is an effective financial habit. Listen to Warren Buffett: “The difference between successful people and really successful people is that really successful people say no to almost everything.”

The hard part is that there is a lot of bullshit – and we’re hardwired to notice it. As hunter-gatherers, every rustle in the leaves or snap of a twig was life or death, 90% of everything was relevant. Humans brains are evolved to see patterns everywhere in the world. We’re effectively conditioned to follow the inverse of Sturgeon’s Law.

The trick is to enhance your ability to distinguish between the good and the bad. In other words, supercharge your bullshit detector.

Supercharging your bullshit detector

Along with exercising a healthy skepticism with Sturgeon’s Law, there are means for seeing right through all the bullshit.

Theoretical physicist Richard Feynman was gregarious yet blunt. He didn’t suffer fools lightly, and he knew how to bring the receipts. His method for identifying pseudoscience was to probe the way in which someone explained something. If someone is unable to express an idea in clear, simple language, and can only regurgitate technically rote definitions and statements out of context, then they are likely full of shit.

The Feynman Technique is a valuable formula for evaluating financial services and products. Be wary of the broker who communicates in unsubstantiated jargon, the insurance collateral accompanied with page after page of fine print, the hypothetical investment returns that sound too good to be true.

Certainly, before giving a piece of information credence, take an extra step to investigate the source. For one, we are susceptible to confirmation bias — the tendency to interpret information as confirmation of our existing beliefs. So, you may find yourself gravitating toward sources that match your own viewpoints. Therefore, seek out opposing viewpoints, which will help you think of issues in a more informed and objective frame of mind.

Further, the person dispensing information may have an agenda. So, above all, ask this question: who benefits most? There is only one person who should benefit from a piece of financial information: you. If you’re not the primary beneficiary of a bit of advice or product or service, then it’s best to walk away.

And with that, I hope you benefit from this post, as I tried as hard as I could to cut all the bullshit.