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The Price of Investing
Successful investing demands a price in terms of volatility, fear, doubt, uncertainty, and regret. Trying to avoid this price often leads to poor decisions. Trying to gain returns without paying the price.
35
681 reads
Bubbles and Short-Term Thinking
Bubbles are not necessarily driven by irrationality, but often by rational short-term trading and momentum chasing, which can be disastrous for long-term investors. "The formation of bubbles isn’t so much about people irrationally participating in long-term investing. They’re about people somewhat rationally moving toward short-term trading to capture momentum that had been feeding on itself."
31
520 reads
Pessimism vs. Optimism
Pessimistic forecasts tend to be taken more seriously than optimistic ones, even if both are equally unfounded. This can lead to fear-driven investment decisions. "If someone who’s full of nonsense tells me that a stock I own is about to collapse because it’s an accounting fraud, I will clear my calendar and listen to their every word."
29
454 reads
The Power of Stories
People create narratives to understand the world, but these narratives are often based on limited information and personal biases, leading to flawed financial decisions. Daniel Kahneman: "Hindsight, the ability to explain the past, gives us the illusion that the world is understandable. It gives us the illusion that the world makes sense, even when it doesn’t make sense. That’s a big deal in producing mistakes in many fields."
31
413 reads
Personalization of Financial Advice
The author avoids giving specific financial advice, arguing that what works for one person may not work for another. "I can’t tell you what to do with your money, because I don’t know you."
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388 reads
Wealth vs. Rich
Wealth is what you have, being wealthy is not spending money you don't have. Spending a lot on things is the fastest way to feel rich, but not the way to be rich.
37
364 reads
IDEAS CURATED BY
CURATOR'S NOTE
This book underscores the importance of recognizing the price of success and avoiding extreme financial decisions to achieve long-term financial well-being and independence
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