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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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I, too, struggle with this. At least we are blessed enough to have some capital. That capital (in theory) should benefit and grow as long-term production increases.
People who should worry more are factory workers in China. What happens when AI robots can do the job better, faster, and cheaper? Their physical movements were outsourced; maybe many of those factories reshored back to the US to take advantage of US tech and robotics, so the factory isn’t even around. While collar jobs are fewer, blue collar jobs are fewer; capital is moving all about.
At least you and I are blessed enough to have something that will benefit from this displacement (capital). More than can be said about 75% of the world’s population.
Additionally, consider some upsides….the world won’t fall apart in the US as the boomers age out and our workforce shrinks. If the US becomes a manufacturing hub again, the rest of the world is mostly still aspiring to reach our living standards, so they will still want to consume, even if US consumption dips as some people are displaced from work.
And many modern problems could be resolved if we dedicated enough mental energy to solving them. Diseases would be eradicated or at least detected and addressed much sooner, more free time (fun tidbit…..the average US worker worked 50-70 hours a week in 1900 (6, 10-12 hours per day). By the 1940s, that 6-day workweek fell to 5 days, with 9-11 hours). By 1950’s, that fell to under 2,000 hours a year, or 40 hours on average, 50 weeks a year. It has hung around 2000-ish for about 60 years (some economists say it is around 1,800 hours in 2025). Perhaps in a decade or two, there will be 4-day work weeks and average hours under 30 per person, while still sustaining the same consumption. Part of that may be more announced national holidays, or it may become a cultural trend to take off Fridays, as the Germans have been doing very recently.
Maybe it leads to more individual protections, even if they are hard to imagine now.
Just as with anything, with bad changes can come good effects, and with good changes can come bad effects. Its a test of faith in humanity. Not all that different than the internet revolution of the 90’s/2000’s, or the robotic revolution of the 1970’s / 1980’s, or the industrial revolution of the early 1900’s.
Thanks for the great thoughts and support, Will!
Jesse
I understand this idea and feeling. I have been thinking for a while about it and how this new tool will change the way we live. But I observe this; so many of the points you make are questions and issues that arise specifically because of the human condition. And that, for me, is the irreplaceable part. I appreciate AI as a tool. I can ask it a question, and it will give me the answer, a table, an explanation, a process, a product, etc… And it will suggest I consider my specific situation, sure. But I don’t think. AI will be able to understand or relate to ME, as a person, the way that a human brain (You) can (I’ve heard of AI significant others, but i’m not convinced.). Example, in one of your podcasts you mentioned the case of a lady who had more money than she would ever be able to spend, (I think it was E109 and perhaps this was not the point you guys were making, but it stuck with me) and still lived in a way that almost assured she would have a considerable amount of money at the end of her life, when she could comfortably change her spending habits and spend more and lavishly. But it was the understanding that these decisions and choices were made because of her lived in experience which shaped her behaviors. And that is something that AI cannot do. AI could tell her “Hey, you’re gonna die with tons of money if you don’t spend more”. But it cannot guide her, empathetically through new experiences and mindsets. And thats what I see as the value of your brain and the service you provide. I can get the answer from AI. But the advice of a trusted partner in these life, human condition decisions, like you provide through the newsletter, podcast, and the services you provide to your clients, well, for this human at east, are not replaceable by AI. Your spot is safe with me man.
I’m not the best writer, but I hope the message is at least understandable.
Thank you again for all the info, content and humanity in your work.
Best
C