This is a great book about how our behavior affects our investment decisions. Here are some highlights from Your Money and Your Brain by Jason Zweig (2007):
p. 55 "...the futility of financial prediction is especially frustrating because it seems so clear that analysis should work..."
Why it does not work is because the "...market consists of billions of daily transactions...there are transaction costs...and...there is a random nature of events..."
p. 57 "...the odds of flipping 3 out of 6 heads or 3 out of 6 tails is the same odds as flipping 6 out of 6 heads or tails..."
p.75 "...it is so vital to put 'sound practices' in place [an Investment Policy Statement] before your investing decisions can be whip-sawed by the whims of the moment..."
p.151 "...if you think a plunge in the value of your investments won't bother you, you are either wrong or abnormal..."
As Mr. Zweig further writes, "...the tension between thinking and feeling with investment decisions leads us to not wanting to be the only one left in stocks whenever others are selling and not to be the last one not invested when momentum has taken over..."
p. 220 "...to avoid greed, fear, over-confidence, surprise and regrets follow 'rules of investing' [again, the Investment Policy Statement and a 'good' financial planner's advice] and do not break them during emotional times. Since no one can predict the future, sit tight, and know why you did what you did when you did it. If you break your own guidelines then sooner or later it is bound to be a mistake..."
p.252 "...we suffer chronic confusion between the price of buying something and the cost [sometimes the opportunity of something else you could have bought or saved for] of owning it!...we are sensitive to the 'now' but insensitive to the 'later' costs..."
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.