Investing Wisdom in One Lines

One of my close friends shared a tweet link by Gautam Baid with me. Gautam shares really good ideas here. I think they are originally by Morgan Housel. Nevertheless it is the idea which really I wanted to note down and reflect upon. I have only jotted those which I think I want to think about later again and modified a few suitably.

The most important finance topics don't require details. Most can be, and should be, summarized in a sentence or two.

• Dollar-cost average for your entire life and you'll beat almost everyone who doesn't.
• Every five to seven years, people forget that recessions occur every five to seven years.
• You're twice as biased as you think you are (four times if you disagree with that statement).
• Read more books and fewer articles.
• Read more history and fewer forecasts.
• Be careful when reading about how stupid investors can be and not realize you're reading about yourself.
• Your circle of competence is probably 90% smaller than you think it is.
• Big risks will always be disregarded; small risks always blown out of proportion.
• When in doubt, choose the investment with the lowest fee.
• Emotional intelligence is more important than book intelligence.
• The more you learn about the economy, the more you realize you have no idea what's going on.
• Start saving for college before your kid is born, and start saving for your retirement before you graduate college. You'll feel silly when you start and like a genius when you finish.
• The most powerful way to grow your money is learning to live with less, since you have complete control over it.
• You have no obligation to have an opinion about anything.
• You have a strict obligation to not have an opinion about things you don't understand.
• You shouldn't feel strongly about any investment you haven't spent at least a week thinking about.
• Holding 60% of your assets in stocks and 40% in bonds isn't perfect for everyone; but I can think of a thousand worse strategies.
• Respect the role luck has played on some of your role models.
• Change your mind as often as the facts change.
• Ignore people who refuse to change their views when the facts change.
• Read last year's market predictions and you'll never again take this year's predictions seriously.
• Two things you can do to make yourself a better investor are increase the amount of time you're investing for and the (intellectual) humility you put into your ideas.
• Just as you should dress appropriately for your age, you should spend appropriately for your income, and not a penny more.
• Warren Buffett has the best explanation of dumb risk-taking: "To make money they didn't have and didn't need, they risked what they did have and did need. And that's foolish. It is just plain foolish."
• You're twice as gullible as you think you are.
• Learn more from your bad investments than your good ones.
• Judge investors by the quality of their arguments also, not just the performance of their last trade.
• You can realistically afford probably half the home the mortgage broker approves you for.
• Admit when you are wrong.
• Imagine how much stuff you'd have to make up if you were forced to talk 24/7. Remember this when watching financial news on TV.
• There is, and always will be, more money to be made providing investment advice than receiving it.
• Assume the worst, hope for the best, accept reality.
• Save for your own retirement; assume insurance cover won't be around (even though they probably will).
• Annuities: A product mixing the complexity of high finance with the sales tactics of used-car salesman has an entirely predictable outcome.
• During the last 100 years, there have been more 10% market pullbacks than Christmases. Everyone knows Christmas will come; think of volatility the same way.
• Don't attempt to keep up with the Joneses without realizing the Joneses aren't any happier than you are.
• Predictions, opinions, and forecasts should be discounted by the number of times the person making them is on TV each week.
• To quote Larry Summers: "A good rule of thumb for many things in life holds that things take longer to happen than you think they will, and then happen faster than you thought they could."
• Quit day trading, and donate your money to charity instead. Same financial result for you, and a better outcome for society.
• Most people's biggest expense is interest, which comes from living beyond your means, and buying things they think will impress others, which comes from insecurity. Avoid these two and you'll grow richer than most of your peers.
• Reaching for yield to increase your income is often like sticking your hands in a fire to warm them up -- good in theory, disastrous in practice.
• Your devotion to a political party or economic philosophy is directly proportional to your tendency to think irrationally about how politics affects your investments.
• There's a strong negative correlation between flaunting money and being rich.
• Investors were probably better informed 20 years ago when there was 90% less financial news.