June 1st, 2010
People are cognitively very, very bad at taking all costs into account when calculating investment returns. In one haunting example from a New York Times article on real estate, one investor illustrates this perfectly:
By comparison, he views the four-bedroom home he bought for $32,500 in 1965 - or about $200,000 in today's dollars - as a money ...
May 18th, 2010
I love discovering delusions about the psychology of money, so here's a question for you:
What are areas where people THINK they're making a lot of money, but actually don't?
Buying a house (people hate hearing this)
Day trading and picking individual stocks (see chapter 6 of my personal finance book for an entire expose on how fancy fund ...
May 9th, 2010
Isn't it interesting how hypocritical we are about money?
We say things like...
"That's ridiculous. Who needs a $200 dinner? That would feed me for 3 months."
"She bought $400 shoes? What a waste of money."
$21,000/year going out? There are starving children in Africa."
Yet when it comes to our new iPad or computer or trip, it's ...
May 3rd, 2010
Blaming everyone for being dumb is one of my most enjoyable activities. Today, a delightful foray into the world of why we're financially illiterate -- and whose fault it is.
Let's start with a Freakonomics article by Stephen J. Dubner:
"1. Do you consider yourself financially literate?
2. If so, how did you get that way?
And now, a third ...
March 21st, 2010
"I had more spending money in college when I was a student working a part-time job."
--A friend who earns over $100,000/year.
How does this happen?
Factor in the following:
Urban living, including going out frequently
Credit card debt from spending on things like going out frequently, shopping, travel
It's a combination of high ...
March 18th, 2010
Some observations on making huge career jumps, your friends, and your own psychology...
It's easy to go through your career taking the same paths others did before you. But small, simple tweaks can make a huge difference in your lifetime.
One of my readers, Alexander, writes:
"I'm reviewing NIH grant proposals right now and seeing your tweets made me think ...