Last week one blog I published caused a flurry of questions to my inbox.
It caused confusion.
And a little anger.
The greatest reaction stemmed from one sentence:
“My own money is in firms such as DFA moving forwards.”
[Estimated reading time: 4 minutes, 4 seconds - read while you plan your morning's to-do list]
Breaking our lives down into numbers can be scary.
We usually feel one of two things.
Terror, followed by no action.
Epiphany, followed by an intense desire to improve.
I read an article recently from one of my favourites, James Clear, which had the latter effect.
How does the thought of having only 25,000 mornings in your adult life make you feel?
Increase your wealth, improve returns and cut costs.
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I borrowed that title from the words of legendary investor Warren Buffet.
He’s talking about market timing.
Trying to get in just before prices start to rise.
And out again as they’re about to fall.
It’s exhausting thinking about it.
Worse still, it’s utterly pointless.
I’m an avid reader.
It’s about personal development.
Which is why I am learning everything I can about learning.
My first stop on that journey is the book Make It Stick, by Peter C. Brown, Henry L. Roediger, III, and Mark A. McDaniel.
A novelist and two cognitive scientists.
My key takeaway?
Elaborate on what you learn to help make it stick.
You’re probably not a good investor…
These aren’t my words.
They’re the statistical reality.
As described by Dan Solin, the New York Times bestselling author of ‘The Smartest’ series of investing books and The Smartest Sales Book You’ll Ever Read.
According to Dan, the “average investor” tends to panic when markets drop.
This causes them to miss out on the relatively few days when the market posts stellar returns.
Buying high and selling low.
Because of this, they enjoy annualised returns of just 2%.
Barely keeping up with inflation.
In the early 1950s, Nobel Prize-winning economist Harry Markowitz started writing about diversification.
He says it’s just as critical today.
So why do so many investors fail to take advantage of it?
I’m a huge fan of James Clear.
He’s an author focused on habits and decision making.
His ideas come from a wide range of disciplines, including biology, neuroscience, psychology, philosophy.
In other words, evidence.
At the core is a simple, but powerful question.
How can we live better?
Someone once said that failure is your greatest teacher.
However, it’s success stories that are used as blueprints for the way things should be done.
Failures become invisible.
Successes more visible.
Enter ‘survivorship bias’, explained in under 3 minutes with our latest video.