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Different Kinds of Smart
The story of Long Term Capital Management is more fascinating than sad. That investors with more academic smarts than perhaps any group before or since managed to lose everything says a lot about the limits of intelligence.
Someone with B+ intelligence in several fields likely has a better grasp of how the world works than someone with A+ intelligence in one field
To make money they didn’t have and didn’t need, they risked what they did have and did need. And that is just plain foolish. If you risk something important to you for something unimportant to you, it just doesn’t make any sense.” – Buffett on the LTCM meltdown
The smart way to handle long-term thinking is enjoying what you’re doing day to day enough that the terminal rewards don’t constantly cross your mind.
Investing During All Time High (Interesting Facts) (Full Blog)
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The thing is one of these all-time highs will be THE peak that occurs before a nasty market crash. There will be a painful bear market and we won’t see new highs for a few years.1
This is the hard part when thinking through a lump sum investment like this.
The math tells you the stock market is up three out of every four years, on average, and investing at all-time highs offers slightly above average results. Those are pretty good odds.
But the psychology tells you losses bring far more pain than the pleasure you receive from gains.
This is why many people are more comfortable dollar cost averaging into the market, even if it’s a sub-optimal approach from a spreadsheet perspective.
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Cash Flow Activities
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Two-page summary of key insights from a recent podcast featuring Professor Sanjay Bakshi
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