A weekly thread to discuss financial matters - from personal all the way up to global.
Ground Rules
- Remember that we're all just Internet randos. Don't bet your life savings on a hot tip from this thread.
- Keep culture war in the culture war thread. Yes, global events may impact our personal finances, but that does not mean we have to incessantly harp on culture war aspects here. If you are going to discuss it, please stick to the practical impacts of it on an individual level.
- Be kind. Remember that everyone here comes from different circumstances. We all have different resources available and different risk tolerances.
- Don't let the perfect be the enemy of the good. Better is better. Celebrate people when they take a step up and work to move their finances in the right direction. Don't flame out because they haven't followed what you consider the optimal path. Everybody has to start somewhere.
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Notes -
A lot of people just aren't really taught, so they go with "well, I heard this is good and simple", which is... often not the worst choice! The only thing my father ever really taught me about retirement was "get the company match, it's free money." The company was good enough to auto-invest in a TDF as a default. And then that got me started and gave me time to learn a bit more, both online, at the water cooler, and at the company sponsored "financial education" sessions. I'm still not saying I'm a genius, but I definitely know a lot more than I used to.
This is just a restatement of how little care people put in, not an explanation, though. Because, even as-of 20 years ago it was essentially trivial to teach oneself how to properly manage one's savings, and yet so many people even today stick to "well, I heard this is good and simple."
My pet theory is that people (certainly including myself) have weird hangups when it comes to things that clearly affect their status that prevents them from wanting to know too much, and so they proactively prevent themselves from learning even the most trivial of things. I see this in weight and diet as well, where people are hesitant to do the most basic work of measuring calories in/calories out before just declaring it too hard for them to lose weight.
This sounds interesting but I'm not sure I grok your idea. Please say more?
One thing I've definitely noticed in my own learning process is that the instincts and intuitions and emotions we developed on the savannah are very poorly suited for investing. It's a very unnatural country to travel in, and you have to learn the customs, leaving any prior conceptualizations behind.
There's also lots of possibly well-intended misinformation that we carry around. It can be a case of 'some knowledge is worse than no knowledge'. We hear BS like 'timing the market is impossible' (a bunch of fund managers failed at doing it in the 1980s and wanted to believe no one else could do it, and their refrain got stuck in the collective unconscious) despite the fact that we are not trying to be an uninvolved person who just DCAs into a passive index fund. It gets in the way when we're trying to take investing as an active interest.
We hear of 'market efficiency', as if this is some hard fact that tells you where a stock will or won't go, because supposedly everything is priced in immediately. If that's the case, why did NVDA go from 200 to like 700 in 3 months - was the market efficient at 200 or was it not?
We hear 'what goes up must come down' (a law of physics, not necessarily markets) which might well keep us from buying the strongest stock just because it has shown strength already. The Monte Carlo effect plays a trick on us here - we think that if 'up' has happened, then 'down' is more likely to happen next. But the reality is that the strongest stocks make new All Time Highs 100 times while the price is on the way from 100 to 200.
We hear 'past performance does not guarantee future results' and variations of this legal disclaimer, despite the fact that history rhymes in the markets like in most fields and precedents in previous successful stocks can help equip our perception. Etc etc. Many such things.
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