Morgan Housel shares four important lessons that he learned from investing and which are relevant to investing plus in other areas as well. Briefly: (1) everyone has a flawed point of view; (2) we have an urge to overcomplicate things; 3) we're all contrarians, except we're not; and (4) we hear what we want to hear. To read the entire article, plug the title into the Google search bar and click on the headlines in your search results.
Four Things the Stock Market Has Taught Me
By Investing is a great way to learn about human behavior—and about yourself
Excerpt:
We have an urge to overcomplicate things.
Live below your means. Save the difference. Invest in a low-cost, diversified portfolio. Have a long-term outlook and be patient as compound interest works its magic. Successful investing isn’t terribly complicated.
But investing is one of the few industries where people believe success must be more difficult than it is.
There is a tendency to think the stock market is like physics—something that works in predictable ways, where measuring something now will explain with precision what will happen next.
If you think stocks are like physics, you believe there must be smart people who can measure exactly where the Dow Jones Industrial Average will be in five months, just as smart people can measure exactly when the sun will rise in five months.
So investors complicate things. They trade, they fiddle, they buy this and sell that—all with the hope of achieving a higher return than can be earned sitting still and letting the market work for you.
But the evidence is overwhelming: The odds that you will achieve long-term success by actively trading or timing the market round to zero.
Picture via Geralt at Pixabay.
