Why Winners Keep Winning

On Cumulative Advantage and How to Think About Luck Photo: PxHere In the late 1970s the view in the publishing world was that an author should never produce more than one book a year. The thinking was that publishing more than one book a year would dilute the brand name of the author. However, this was…

The Process Matters

Why All Value Investing is Not Created Equal Photo: Pixabay On the first day of ceramics class the teacher announced that the students would be split into two groups. One group would be graded on the quantity of the work they produced while the other group would be graded on the quality of the work they…

Be Careful What You Choose

How Your Preferences Evolve and Why It Matters Photo: Pixabay The experiment seemed simple enough. Each participant had to rank six paintings from their most favorite (1) to their least favorite (6). They were then told they could take home either the painting they ranked 3rd or the painting they ranked 4th. Naturally, most people choose…

In the Land of the Lost

On the Ever-Changing Landscape of Markets Photo: Wikimedia Commons It was 1913 and Theodore “Teddy” Roosevelt was embarking on a journey down the Rio da Duvida (River of Doubt). The river was one of the last uncharted places on the surface of the Earth and was arguably the most dangerous in all of the Amazon. However,…

The Echo Chamber

On Challenging Your Beliefs Photo: Pixabay Sam Walton created more wealth in the twentieth century than almost anyone else. His relentless spirit to compete while building WalMart is the reason why the Waltons are still the richest family in America with a combined net worth of over $150 billion. What I found most interesting about Walton’s…

The 6 Ways of Influence

On Recognizing and Preventing Financial Trickery Snake Oil (Photo: Wikimedia Commons) One of the best books I have ever read concerning human behavior is Influence: The Psychology of Persuasion by Robert Cialdini. In the opening chapter, Cialdini describes a peculiar trait about mother turkeys that has an interesting parallel to how humans behave: Turkey mothers…

Ask Yourself Why

On Knowing Your Values and Solving Problems Backwards Photo: Pixabay Why do you invest? Really think about it. My gut response used to be, “to replace my future income,” as I’ve discussed here. However, this response was incomplete. I say incomplete because it seemed too cold and mathematical. It was not based on my personal…

Lies, Damned Lies, and Stories

How Great Storytelling Can Blind Us From Reality Photo: Pixabay The computer graphics team at Lucasfilm was working around the clock to finish their two minute animated short, The Adventures of Andre and Wally B., before the annual SIGGRAPH computer graphics conference in Minneapolis. However, it was becoming clear that the team would not finish in…

Stay on Script

On the Importance of Sticking to Your Investment Plan Photo: Pixabay In his first year he turned $15,000 into $193 million. The following year he took $3 million and made it into $177 million. You might be thinking that I am talking about one of the greatest investors of all time, but I’m not. The…

Roll the Dice

On Risk and the Cost of Inaction Photo: Pexels Fred Smith was at his wit’s end. He had already sunk most of his net worth into starting a package delivery company called Federal Express (later FedEx) and General Dynamics, the company that he had obtained funding from previously, had just denied his request for additional funds….