Comments on: Why “average is not normal” — and why most people get this wrong http://www.iwillteachyoutoberich.com/blog/why-average-is-not-normal-and-why-most-people-get-this-wrong/ Personal finance blog for college students, recent graduates and everyone else -- including entrepreneurship -- for getting rich. Featured in the Wall Street Journal and New York Times. Sat, 20 Mar 2010 15:51:44 -0700 http://wordpress.org/?v=abc hourly 1 By: The Lazy Way To Creating Real Wealth In The Market | Building Wealth Together http://www.iwillteachyoutoberich.com/blog/why-average-is-not-normal-and-why-most-people-get-this-wrong/comment-page-1/#comment-103482 The Lazy Way To Creating Real Wealth In The Market | Building Wealth Together Thu, 16 Jul 2009 14:24:40 +0000 http://www.iwillteachyoutoberich.com/blog/?p=1172#comment-103482 [...] your wealth grow exponentially over time. The market has historically returned an average of 8%. While average is not normal (I love that post) it is a good bet that the trend will continue over [...] [...] your wealth grow exponentially over time. The market has historically returned an average of 8%. While average is not normal (I love that post) it is a good bet that the trend will continue over [...]

]]> By: Why You Should Stop Complaining About (And Keep Contributing to) Your 401 (k) | Nickeled and Dimed http://www.iwillteachyoutoberich.com/blog/why-average-is-not-normal-and-why-most-people-get-this-wrong/comment-page-1/#comment-92115 Why You Should Stop Complaining About (And Keep Contributing to) Your 401 (k) | Nickeled and Dimed Mon, 16 Mar 2009 04:26:47 +0000 http://www.iwillteachyoutoberich.com/blog/?p=1172#comment-92115 [...] so good it landed guest post gigs on two of the top personal finance sites, Get Rich Slowly and I Will Teach You to Be Rich.  In the article, Richards explains the difference between average investment returns over a long [...] [...] so good it landed guest post gigs on two of the top personal finance sites, Get Rich Slowly and I Will Teach You to Be Rich.  In the article, Richards explains the difference between average investment returns over a long [...]

]]> By: Mark http://www.iwillteachyoutoberich.com/blog/why-average-is-not-normal-and-why-most-people-get-this-wrong/comment-page-1/#comment-90457 Mark Sat, 28 Feb 2009 01:47:46 +0000 http://www.iwillteachyoutoberich.com/blog/?p=1172#comment-90457 When will folks learn that markets, like everything in life, are cyclical? There isn't anything in tomorrow that doesn't get learned from today. When will folks learn that markets, like everything in life, are cyclical?

There isn’t anything in tomorrow that doesn’t get learned from today.

]]> By: QuickTax Winners, Book Giveaway, and Weekend Links | Million Dollar Journey http://www.iwillteachyoutoberich.com/blog/why-average-is-not-normal-and-why-most-people-get-this-wrong/comment-page-1/#comment-90387 QuickTax Winners, Book Giveaway, and Weekend Links | Million Dollar Journey Fri, 27 Feb 2009 11:29:51 +0000 http://www.iwillteachyoutoberich.com/blog/?p=1172#comment-90387 [...] I Will Teach You To Be Rich explains why average is not normal and why most people get this wrong. [...] [...] I Will Teach You To Be Rich explains why average is not normal and why most people get this wrong. [...]

]]> By: rackgen http://www.iwillteachyoutoberich.com/blog/why-average-is-not-normal-and-why-most-people-get-this-wrong/comment-page-1/#comment-89312 rackgen Mon, 16 Feb 2009 06:20:18 +0000 http://www.iwillteachyoutoberich.com/blog/?p=1172#comment-89312 This is indeed true - returns are never in a range and it never goes up all the time. Part of the solution is may be to monitor the investments & utilize low cost ones like ETFs. There is no single solution for all of us. This is indeed true – returns are never in a range and it never goes up all the time.

Part of the solution is may be to monitor the investments & utilize low cost ones like ETFs. There is no single solution for all of us.

]]> By: Sunday Links | Centsability to Wealth http://www.iwillteachyoutoberich.com/blog/why-average-is-not-normal-and-why-most-people-get-this-wrong/comment-page-1/#comment-89293 Sunday Links | Centsability to Wealth Sun, 15 Feb 2009 21:16:02 +0000 http://www.iwillteachyoutoberich.com/blog/?p=1172#comment-89293 [...] at I Will Teach You to Be Rich had a guest post from Carl Richards of Behavior Gap about why average is not normal.  The post highlights why [...] [...] at I Will Teach You to Be Rich had a guest post from Carl Richards of Behavior Gap about why average is not normal.  The post highlights why [...]

]]> By: Danielle http://www.iwillteachyoutoberich.com/blog/why-average-is-not-normal-and-why-most-people-get-this-wrong/comment-page-1/#comment-89280 Danielle Sun, 15 Feb 2009 17:44:36 +0000 http://www.iwillteachyoutoberich.com/blog/?p=1172#comment-89280 This is one of the reasons I am so bummed about being out of work! I would love to be increasing our contributions right now, but have to focus on covering our minimum expenses with 1 paycheck and desperately trying to not tap our emergency fund. Regarding the stock market as a whole, I loved this video as a way to illustrate the ups and downs and have forwarded a link on, especially to my siblings and other young adults I know! There is one outcome of a recession/depression that does not get much press. There is a very small chance that our whole free market economy and the government could crash and all money invested in equities and bonds would be gone ( or just devalued to the point that you could barely buy a train ticket with the $500K left in your portfolio). I am not an economist or a statistician so I don't have any numbers to back up this claim and I don't think this will happen in my lifetime BUT it is the reason to support the claim "don't invest anything that you can't afford to lose". Pay yourself first by setting up an emergency fund, investing in your education and making informed decisions when it comes to your money. It's all we can do. This is one of the reasons I am so bummed about being out of work! I would love to be increasing our contributions right now, but have to focus on covering our minimum expenses with 1 paycheck and desperately trying to not tap our emergency fund.

Regarding the stock market as a whole, I loved this video as a way to illustrate the ups and downs and have forwarded a link on, especially to my siblings and other young adults I know!

There is one outcome of a recession/depression that does not get much press. There is a very small chance that our whole free market economy and the government could crash and all money invested in equities and bonds would be gone ( or just devalued to the point that you could barely buy a train ticket with the $500K left in your portfolio).

I am not an economist or a statistician so I don’t have any numbers to back up this claim and I don’t think this will happen in my lifetime BUT it is the reason to support the claim “don’t invest anything that you can’t afford to lose”. Pay yourself first by setting up an emergency fund, investing in your education and making informed decisions when it comes to your money.

It’s all we can do.

]]> By: Weekly Dividend Investing Roundup - February 14, 2009 | The Dividend Guy Blog http://www.iwillteachyoutoberich.com/blog/why-average-is-not-normal-and-why-most-people-get-this-wrong/comment-page-1/#comment-89185 Weekly Dividend Investing Roundup - February 14, 2009 | The Dividend Guy Blog Sat, 14 Feb 2009 11:00:54 +0000 http://www.iwillteachyoutoberich.com/blog/?p=1172#comment-89185 [...] More on why average is not normal [...] [...] More on why average is not normal [...]

]]> By: TheFinancialWoman http://www.iwillteachyoutoberich.com/blog/why-average-is-not-normal-and-why-most-people-get-this-wrong/comment-page-1/#comment-89120 TheFinancialWoman Fri, 13 Feb 2009 20:38:04 +0000 http://www.iwillteachyoutoberich.com/blog/?p=1172#comment-89120 I think that your Point # 10 says it all. Constructing an asset allocation that allows for adjustments when various markets have had huge moves outside of the norm. Having had the largest stock market correction since 1931, this would certainly seem like one of those times. There should also be an acceptance that the perfect tops and bottoms will likely be missed, and that buying and selling somewhere in the area of the tops and bottoms is good enough. For example, one may have sold stock holdings in early 1999, not early 2000, and missed the last leg up of that bull market, but in hindsight, that investor would have been wise having missed the nasty correction of the early 2000's. It comes down to easing into undervalued markets and easing out of overvalued ones, and having the discipline and confidence to be a contrarian at times. I think that your Point # 10 says it all. Constructing an asset allocation that allows for adjustments when various markets have had huge moves outside of the norm. Having had the largest stock market correction since 1931, this would certainly seem like one of those times. There should also be an acceptance that the perfect tops and bottoms will likely be missed, and that buying and selling somewhere in the area of the tops and bottoms is good enough. For example, one may have sold stock holdings in early 1999, not early 2000, and missed the last leg up of that bull market, but in hindsight, that investor would have been wise having missed the nasty correction of the early 2000’s. It comes down to easing into undervalued markets and easing out of overvalued ones, and having the discipline and confidence to be a contrarian at times.

]]> By: The Idea Tour Spreads http://www.iwillteachyoutoberich.com/blog/why-average-is-not-normal-and-why-most-people-get-this-wrong/comment-page-1/#comment-89115 The Idea Tour Spreads Fri, 13 Feb 2009 20:14:53 +0000 http://www.iwillteachyoutoberich.com/blog/?p=1172#comment-89115 [...] Why “average is not normal” — and why most people get this wrong Tons of people have withdrawn all their money from the stock market because….well, they don’t really know why — it just feels “bad” to keep it in. Logically, we all understand that the stock market’s average return of about 8% is an average — meaning it goes up and down — but when our 401(k) drops 40%, we want to get out immediately.—IWillTeachYoutobeRich.com [...] [...] Why “average is not normal” — and why most people get this wrong Tons of people have withdrawn all their money from the stock market because….well, they don’t really know why — it just feels “bad” to keep it in. Logically, we all understand that the stock market’s average return of about 8% is an average — meaning it goes up and down — but when our 401(k) drops 40%, we want to get out immediately.—IWillTeachYoutobeRich.com [...]

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