Emotions are an integral part of the human experience. However, our emotions often cause us to make poor decisions. In the realm of investing, two emotions most commonly accompany bad decision-making: fear and greed
As investors, we are always tempted to extrapolate recent performance indefinitely into the future. Unfortunately, the statistical concept of mean reversion suggests those same outperformers will likely underperform in other years.
If you seek wealth to increase your social status, you will never have enough. The real benefit of wealth, however, is control. Wealth allows you to control the one asset you have that you cannot create any more of: your time!
In the quest for a meaningful and fulfilling life, some timeless principles can be applied to how we manage our finances. These principles, rooted in the human experience and our innate capacity for resilience and need for purpose, can guide us in making wise financial decisions.
Because of our Self-serving Bias, it's easy to fool ourselves into thinking we have more to do with our successes than we actually did. As Richard Feynman famously said, “You must not fool yourself, and you are the easiest person to fool.”
A lot can change in one year, the S&P 500 is up nearly 20%, with international stocks up nearly the same. This recovery took place despite rising interest rates, high inflation, the war in Ukraine, a few bank collapses, and a debt ceiling crisis.
By understanding the relative nature of money, harnessing the power of compounding, embracing frugality, managing emotions and biases, valuing time, and redefining wealth, readers can develop a healthier and more sustainable relationship with money.
No matter how much money you have, you get used to it. The exciting thing is not simply having wealth; it's experiencing the contrast between what you had before and what you now have. Once that contrast wears off, you are adjusted to the new wealth baseline.
The Almanack of Naval Ravikant is a collection of wisdom and insights from the well-known entrepreneur and investor. In the book, Naval shares his thoughts on a variety of topics, including wealth, happiness, and success. Below are some of the key takeaways from the book on how to achieve wealth and happiness
Quarry Hill Advisors' own Bjorn Amundson was interviewed by KTSP on the banking crisis
Silicon Valley startups nearly lost all their cash when Silicon Valley Bank collapsed this month. Almost all of the cash at this bank was uninsured. Had the government not intervened, thousands of companies would have instantly gone up in smoke.
The hope of outsized investment returns allures investors to take risks that could lead to catastrophe. No potential return is worth losing everything you have.
If your perspective is only shaped by your own experience, your blind spots will hinder your view of reality.
With money, habits are incredibly powerful. Financial Therapist Brad Klontz calls them “Money Scripts.” We develop our Money Scripts throughout our lives. Some Scripts are helpful to us, but others are not.
Everything worth doing requires challenge and hardship. Children gaining independence is hard and scary for them (and their parents!). Improving your fitness requires stressing your body so that it recovers stronger. Investing for robust, long-term returns requires enduring painful (yet temporary) declines.
There is regret that comes from folly, and we want to avoid that type at all costs. But sometimes, some forms of regret stem from a wise decision.
Maybe you notice a charge on your credit card you don’t remember or all of a sudden you stopped receiving your bills and mail. Unfortunately, we are seeing this more and more frequently as of late.
Your plan is wrong. Despite our very best efforts, it was wrong from the moment it was created. In fact, I'm quite certain that not one of the 1,000 scenarios we modeled will come to pass. Even if we knew the exact returns of the market for every year going forward for the next 50 years, your plan would still be wrong.
Cornelius Vanderbilt was the patriarch of the family and an industrial-era railroad tycoon. He once told his son, "Any fool can make a fortune; it takes a [person] of brains to hold onto it." As it turned out, the Vanderbilt family didn't have enough brains.
When it comes to investing, uncertainty is the only certainty. There is always a headline to worry about - wars, viruses, debt-ceilings, Brexit, bubbles, elections, and on and on.