Dumb Azz Money Moneys (25 characters!)

Terrific NYT article on the obvious. Sorry about paywall. Nothing you need to read because we have already chewed it all over, but does offer emotional satisfaction.

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Key quotes for me.

Retail investors have a well-established track record of destroying their own wealth. Studies have shown that individual traders somehow have the opposite of skill — they manage to do worse than they would by picking stocks at random.

The ineptitude of individual investors is not for lack of trying. In fact, the harder that individual investors try (in the sense of trading more often), the more they lose. For example, the professors Brad Barber and Terrance Odean found that women investors did better than men. Why? Because men traded more. (They titled their paper “Boys Will Be Boys.”) So the conclusion from this finding is not (necessarily) that men are dumber. They are just more aggressively and overconfidently manifesting their dumbness. Perhaps this idea will resonate with some readers.

Ask any finance professor and you’ll get the same boring answer: The best way for most people to invest in the long term is to hold a diversified portfolio of stocks. Admittedly, a movie about a bunch of ordinary people gradually building wealth through prudent financial decisions would be the world’s most boring movie. Boring, but also not dumb.