A great takeaway from one of my favourite money books, The Most Important Thing by Howard Marks is about understanding cycles. Here is how he explains it: “I think it’s essential to remember that just about everything is cyclical. There’s little I’m certain of, but these things are true: Cycles always prevail eventually. Nothing goes in one direction forever. Trees don’t grow to the sky. Few things go to zero. And there’s little that’s as dangerous for investor health as insistence on extrapolating today’s events into the future.”
The problem is that each cycle is different. So it’s very difficult to convince yourself that; a) The good times will eventually end OR b) The bad times won’t last forever. What this means is that we tend to sell after prices go down and we buy after a run-up in price. My all-time favourite Behaviour Gap sketch by Carl Richards sums it up beautifully: 3/7/2018
How do you eat an elephant?The truth is, ambitious goals can intimidate and demoralise as much as they can motivate and inspire. Big goals can seem overwhelming. Sometimes, it’s just simpler and less stressful not to make any promises! 26/6/2018
War for your walletWe engage in battle every day. Sadly, many of us are losing the fight. It's the war between wants and needs.
You don't need a new car but you sure do want one. Those expensive shoes - you've just got to have them. That newest electronic gadget. You really don't need it, you just really want it. 12/6/2018
The one certaintyMeet Bill and Mary. Bill is a senior executive, Mary volunteers in their community. They have three kids, live in the suburbs, have a rental property and are saving for retirement. But like 46% of adults in Australia, Bill and Mary do not have a will. They need one. Here’s why. William Bernstein has several good reads, including the one I’ve just finished The Investor’s Manifesto, Preparing for Prosperity, Armageddon and Everything in Between. (yes, I was lured by the title)
For those that haven’t heard of William Bernstein, his status is legendary in financial circles. There’s a couple of things that I really like about him – 24/4/2018
Simple ≠ Easy“It can’t be that simple, surely”, is something I hear a lot. People just assume that money management is complex. That’s no surprise really, as the traditional financial industry is built on the premise that complexity equals value or to be more pointed, the more complex the solution, the more someone should pay for it. The industry is very willing to sell you this crap. The media don’t help either as eye-grabbing content sells. 17/4/2018
The Espresso StrategyWhen you haven't got much capital of your own, the road to financial security can seem long and arduous. But the truth is that wealth building is actually pretty simple.
All it takes is time and the price of a cup of coffee. A third of marriages end in divorce*. Relationship breakdown is an emotionally difficult time, that can have a significant financial impact as well, This impact can continue well into later life. For example, households with men and women aged 55–64 years who haven't divorced earn around $10,000 a year more than those households headed by divorcees**of the same age.
27/3/2018
How much debt is enough?In the perfect world, we’d all be debt free.
For most of us though, we can’t get by without it. The question is, how much debt is enough? As they say, a little bit of something is alright, but too much is another story. 13/3/2018
The Cost Of UrgencyHumans are hardwired to want things -- now. It’s called instant gratification, and it’s a powerful force. In most psychological models, humans are believed to act upon the “pleasure principle.” The pleasure principle is basically the driving force that compels human beings to gratify their needs, wants, and urges.
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10/7/2018