The Psychology of Money - A Blog Post

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AlohaJoe
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Re: The Psychology of Money - A Blog Post

Post by AlohaJoe » Fri Jun 08, 2018 9:23 pm

Elbowman wrote:
Fri Jun 08, 2018 12:39 pm
I loved this one:
There are over 2,000 books picking apart how Warren Buffett built his fortune. But none are called “This Guy Has Been Investing Consistently for Three-Quarters of a Century.”
Yeah, I'm always reminded that Warren Buffet wasn't even a billionaire until his 50s. So I've still got a chance! 8-)

pkcrafter
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Re: The Psychology of Money - A Blog Post

Post by pkcrafter » Sat Jun 09, 2018 11:42 am

Excellent article by Morgan Housel. It has that rare quality where we say, yes, he's obviously exactly right! But then why haven't we already mentioned it?

Another bell ringer - Larry S is on the board!! Welcome Larry.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Beehave
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Re: The Psychology of Money - A Blog Post

Post by Beehave » Sat Jun 09, 2018 3:55 pm

Fallible wrote:
Fri Jun 08, 2018 4:49 pm
randomguy wrote:
Fri Jun 08, 2018 1:08 pm
livesoft wrote:
Fri Jun 08, 2018 12:51 pm
Elbowman wrote:
Fri Jun 08, 2018 12:39 pm
I loved this one:
There are over 2,000 books picking apart how Warren Buffett built his fortune. But none are called “This Guy Has Been Investing Consistently for Three-Quarters of a Century.”
And that's apparently how Grace Groner built her fortune, too. But there are not 2,000 books about that.
She is a totally nonBoglehead. Buying and holding stock in the company you work at. Way too much undiversified risk:) I ...
Actually, Grace Groner is a Boglehead in the key sense that she stayed the course and, as Housel puts it, "enjoyed eighty years of hands-off compounding." And "hands-off" is all the behavior Housel needs to make his point.
+1 For her to have been a dyed-in-the-wool Boglehead she would have had to beat Mr. Bogle to the punch by inventing and implementing indexed mutual funds herself. My vote is to put her in the Boglehead Hall of Fame.

bling
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Re: The Psychology of Money - A Blog Post

Post by bling » Sun Jun 10, 2018 10:40 am

the graph of the stock market for those born in 1950 vs those born in 1970 is pretty frightening.

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David Jay
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Re: The Psychology of Money - A Blog Post

Post by David Jay » Mon Jun 11, 2018 8:01 pm

bling wrote:
Sun Jun 10, 2018 10:40 am
the graph of the stock market for those born in 1950 vs those born in 1970 is pretty frightening.
Not tracking, for which group is it frightening?
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Sandtrap
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Re: The Psychology of Money - A Blog Post

Post by Sandtrap » Mon Jun 11, 2018 9:19 pm

alpenglow wrote:
Thu Jun 07, 2018 10:58 am
I just came across this blog post and thought it might be of interest here.

http://www.collaborativefund.com/blog/t ... -of-money/
Excellent article.
thanks for posting.
mahalo,
j

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knpstr
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Re: The Psychology of Money - A Blog Post

Post by knpstr » Mon Jun 11, 2018 9:38 pm

livesoft wrote:
Fri Jun 08, 2018 1:21 pm
Sure, she could have left 2 to 20 times or even more to charity. But we have to remember index funds were not available most of her life.
And further to remember that while index funds are great, one can do superb without them. (sorry coming from the Dave Ramsey investment bashing thread)
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

thx1138
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Re: The Psychology of Money - A Blog Post

Post by thx1138 » Tue Jun 12, 2018 5:12 pm

Thanks for the link! Missed it until today for some reason. Downloaded the PDF version to share with young folks starting out.

Not just good points but the presentation and perspective is excellent.

Hidjet
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Re: The Psychology of Money - A Blog Post

Post by Hidjet » Tue Jun 12, 2018 10:31 pm

Nice read. Thanks for the link to this.

Some interesting stuff under the "what we're reading" section also.

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alpenglow
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Re: The Psychology of Money - A Blog Post

Post by alpenglow » Wed Jun 13, 2018 7:57 am

Candor wrote:
Fri Jun 08, 2018 8:53 pm
One of my favourites: 'When most people say they want to be a millionaire, what they really mean is “I want to spend a million dollars,” which is literally the opposite of being a millionaire.'

Lots of wisdom in this blog. Thanks.
I agree. I had to forward this quote to my wife because my MIL is always saying it.

I'm glad people are finding this to be of use. I also printed the pdf for future reference.

bgf
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Re: The Psychology of Money - A Blog Post

Post by bgf » Wed Jun 13, 2018 8:13 am

randomguy wrote:
Fri Jun 08, 2018 1:08 pm
livesoft wrote:
Fri Jun 08, 2018 12:51 pm
Elbowman wrote:
Fri Jun 08, 2018 12:39 pm
I loved this one:
There are over 2,000 books picking apart how Warren Buffett built his fortune. But none are called “This Guy Has Been Investing Consistently for Three-Quarters of a Century.”
And that's apparently how Grace Groner built her fortune, too. But there are not 2,000 books about that.
She is a totally nonBoglehead. Buying and holding stock in the company you work at. Way too much undiversified risk:) I would love to see the returns of any of the type of people. How much is just happening to pick a company that returns say 15% over 30 years. Doesn't happen much but it happens enough when you are looking at thousands of companies.
the entire city of winston-salem did pretty well over many decades just holding one stock. from what i've read, it was like a religion, selling a share of stock was like murdering a member of your own family.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

Enganerd
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Re: The Psychology of Money - A Blog Post

Post by Enganerd » Wed Jun 13, 2018 7:25 pm

alpenglow wrote:
Thu Jun 07, 2018 10:58 am
I just came across this blog post and thought it might be of interest here.

http://www.collaborativefund.com/blog/t ... -of-money/
Great blog post. I read it on twitter and planned on posting it here but see you beat me to it. :sharebeer

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VictoriaF
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Re: The Psychology of Money - A Blog Post

Post by VictoriaF » Sat Jun 16, 2018 3:05 pm

nisiprius wrote:
Thu Jun 07, 2018 11:35 am
This is a big one, and I've never heard it said before, yet it's obvious:
When you see someone driving a nice car, you rarely think, “Wow, the guy driving that car is cool.” Instead, you think, “Wow, if I had that car people would think I’m cool.” Subconscious or not, this is how people think.

The paradox of wealth is that people tend to want it to signal to others that they should be liked and admired. But in reality those other people bypass admiring you...
You see, Nisi, this is obvious to you because you are not a girl. When a girl sees someone driving a nice car, she does not necessarily think that he is cool but she thinks "Wow, I want this guy."

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

delamer
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Re: The Psychology of Money - A Blog Post

Post by delamer » Sat Jun 16, 2018 3:14 pm

VictoriaF wrote:
Sat Jun 16, 2018 3:05 pm
nisiprius wrote:
Thu Jun 07, 2018 11:35 am
This is a big one, and I've never heard it said before, yet it's obvious:
When you see someone driving a nice car, you rarely think, “Wow, the guy driving that car is cool.” Instead, you think, “Wow, if I had that car people would think I’m cool.” Subconscious or not, this is how people think.

The paradox of wealth is that people tend to want it to signal to others that they should be liked and admired. But in reality those other people bypass admiring you...
You see, Nisi, this is obvious to you because you are not a girl. When a girl sees someone driving a nice car, she does not necessarily think that he is cool but she thinks "Wow, I want this guy."

Victoria
:D

thx1138
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Re: The Psychology of Money - A Blog Post

Post by thx1138 » Sat Jun 16, 2018 8:48 pm

VictoriaF wrote:
Sat Jun 16, 2018 3:05 pm
nisiprius wrote:
Thu Jun 07, 2018 11:35 am
This is a big one, and I've never heard it said before, yet it's obvious:
When you see someone driving a nice car, you rarely think, “Wow, the guy driving that car is cool.” Instead, you think, “Wow, if I had that car people would think I’m cool.” Subconscious or not, this is how people think.

The paradox of wealth is that people tend to want it to signal to others that they should be liked and admired. But in reality those other people bypass admiring you...
You see, Nisi, this is obvious to you because you are not a girl. When a girl sees someone driving a nice car, she does not necessarily think that he is cool but she thinks "Wow, I want this guy."

Victoria
Haha! And another reason not to buy a nice car if you are a guy - it will select for the worst kind of potential life partner to attempt to start a relationship with you!

peter_s
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Re: The Psychology of Money - A Blog Post

Post by peter_s » Sat Jun 16, 2018 8:52 pm

During the 50's at least, car ads often featured a gorgeous woman standing next to the car: get the car ... get the woman!

heyyou
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Re: The Psychology of Money - A Blog Post

Post by heyyou » Sat Jun 16, 2018 9:24 pm

it will select for the worst kind of potential life partner to attempt to start a relationship with you!
+1

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nedsaid
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Re: The Psychology of Money - A Blog Post

Post by nedsaid » Sun Jul 22, 2018 12:04 pm

larryswedroe wrote:
Fri Jun 08, 2018 10:05 am
thanks for posting, outstanding article and why many financial advisors say they don't manage money as much as they manage people

Larry
This was one of the best financial articles that I have ever read. It also reinforces what I often say here that the markets and the economy are dynamic. One can point to the innovations in finance. Not too long ago, there was no such thing as a discount broker. Mutual funds came along in the 1920's, most of them were loaded funds and that is true even today. The index fund became available in the mid-1970's. ETFs came along sometime later. 401(k) accounts came about through a loophole in the tax law, IRA accounts are a similar story. Both types of accounts are relatively recent in origin. If you wanted financial news, you read the Wall Street Journal and watched Nightly Business Report and Wall $treet Week. There was no CNBC. There was no internet, it didn't become available to the masses until the early-to-mid 1990's.

I liked what Phil Knight had to say about Venture Capital. Again, a recent phenomenon. We take for granted things that didn't used to be available.

The article discusses a lot the behavioral errors that people make. One such error is excessive pessimism. It also discusses how our beliefs are formed as we come of age into adulthood. For example, I am a stock guy because my early adult years were the very start of a terrific bull market. If I had come of age during the 1930's, my investment approach would be far more cautious.

Too bad we can't put this article into the Boglehead's Wiki.
A fool and his money are good for business.

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