Our Blog: 09/01/2019

For some of us, it’s hard to stop on the idea that investing should be interesting. Picking stocks and shares can be fun, after all, and there’s nothing like getting your timing right and bragging about it later with friends. But it’s important to separate the principles of speculation and trading.

For all the gathered wisdom about asset allocation, risk, diversification, and self-discipline, some people appear bound to see investing as an end in itself rather than a means to an end. For these folks, picking stocks is a hobby. They follow the gurus and soak up the financial press. Despite evidence to the contrary, they’re convinced they can build a regularly winning strategy by exploiting perceived mistakes in market prices. Area of the justification is the individual tendency toward overconfidence. For instance, most of us prefer to think of ourselves as above-average drivers, when that’s simply not possible. In investing Likewise, most of us believe we have powers of foresight not apparent in the wider population.

A Duke University study of corporate executives published in 2010 2010 found a dismal record of prediction among a group you might think would do well. Indeed, of 11,600 forecasts for the S&P 500 over nine years, the survey found executives’ estimates of future profits and actual final results were negatively correlated.

Research also suggests the tendency to operate a great deal and make assured forecasts about shares has a gender bias. Whether it’s a testosterone-driven instinct among men to boast or something else, study after research shows men find it harder to simply accept that they are unlikely to “beat” the marketplace. The point of trading is to try hard and Surely, Don Quixote-like, to charge at those market windmills?

• Any overall reduction from a publicly exchanged company
• Relation with Wealth:-
• 2nd residential property: 7%
• Wiz Khalifa – $15k+
• Add: Interest for $750M @ 3.03% MTN 001 series = 3.03% x $750M

There are a couple of ways of confronting this mindset. The first is to hope for a big change in human character and persuade each would-be get better at of the world to separate his urge for ego gratification from his need to construct wealth patiently and effectively. This is not impossible, of course. But one suspects it would take the time and would need a great deal of face keeping.

A second strategy is to separate the investment nest egg from the play money. If someone really wants to speculate, he can be allowed to do this with the proviso that long-term retirement money be spent the uninteresting way. It’s understandable that investing is some sort of a hobby for some people.