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Denial is a psychological defense mechanism where the mind refuses to accept reality or facts to avoid painful emotions, anxiety, or stress. It acts as an unconscious protective barrier, allowing individuals to ignore, minimize, or rationalize uncomfortable truths. While sometimes providing temporary, adaptive coping, it often leads to harmful, persistent avoidance.
Charlie Munger wrote extensively about denial. Munger would share his personal anecdote of a family friend whose “super-athlete son” disappeared while flying over the North Atlantic. Despite the sad reality of what clearly happened, the mother refused to believe her son was dead.
Denial affects us all. “I’m too smart for denial” is wrong. Smart people are more susceptible to denial because they’re better at constructing justifications.
The investing world is full of denial. Investors use dreamy narratives (“castles in the sky”) to describe (and deny) otherwise frothy, bubblicious behavior. Collective denial becomes social proof that the irrational behavior is justified.
My Anti-Denial Confession…
In an effort to confront my inner-denial voice, I’ve got to confess:
A.I. scares me.
Not in a Terminator sense. At least not yet. I’m not scared of SkyNet and cyborgs and total annihilation. Perhaps I should be?
I’m scared in a much more mundane, but perhaps equally existential sense.
I feel…replaceable in a way that I’ve never felt before. Not once.
A.I. is “commoditizing” intelligence, much in the same way that Sunoco and Mobil and Shell have commoditized gas. I feel like a horse watching Model T’s roll off the Ford assembly line.
Our human brains are personal sources of incredible uniqueness. What’s more unique than your thought process, your personality, etc.? My brain has been an important differentiator in my life. I am my brain. Assuming you enjoy my work, what you really enjoy is my brain.
But my brain and your brain and all of our brains have new competition.
Competition isn’t new. I’ve always known Morgan Housel and Josh Brown were out there writing. They’re in the hall of fame for what I’m trying to do. And I’m glad there are other people I can emulate. I’m better for reading Morgan and Josh and all the others.
But what happens when any person with an Internet connection can “write” better than me, or Morgan, or Josh? What happens when A.I. can write this very article “better” than I can?
I aspire to many financial podcasters, too. But soon, A.I. will not only write better ideas and scripts than me, but even deliver those scripts in my voice. I’m not oozing with charisma, but I hold my own. Doesn’t matter. A.I. will bury me.
A.I. will “teach” better than me. Teaching isn’t easy. You’ve got to have a strong “theory of mind” – the understanding of how other people’s minds work. I love teaching. But my teaching “edge” isn’t long for this world.
Then, of course, A.I. will be able to deliver better financial planning than me. A.I will accept all the details a client feeds it. It won’t miss a beat. It will ask great follow-up questions. It’ll incorporate everything. The bots will never forget! They’ll retain every detail. And that’s good (for you, the “client”). The final financial plan, I’m sure, will be pristine.
But Jesse – A.I. can never replace your uniqueness! A.I. cannot replicate the “human touch,” especially your human touch!
I hope you’re right. It would make me feel a lot better. An overwhelming number of financial planners are saying, “I can’t be replaced. My human touch is indispensable.”
Maybe that’s true. I certainly hope it’s true. But I know how prevalent denial is. For my own sake and for many other workers’ sake, I hope A.I. is more a worker’s friend than foe.
Otherwise, we’re all about to have an existential moment.
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