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….

A Margin of Safety

The Most Important (And Difficult) Investment Rule to Follow Preikestolen, Norway (Photo: Pexels) On the surface, the life of Christina Santhouse does not seem particularly remarkable. She has a master’s degree in speech pathology. She owns her own home. She is married. But, there is something different about Christina — she only has half a brain. At the age…

The Abnormal Environment

On Unexpected Side Effects and How to Prepare for Them Nuclear Bomb, Goldsboro, NC (Photo: Wikimedia Commons) They were 10 hours into the mission when things started to go wrong. First, someone noticed that fuel was leaking out of the right wing of their B-52 bomber. In an effort to prevent disaster, the commanding officer, Major…

It’s All Relative

On Financial Relativity and Overcoming Your Biases Photo: Pexels Imagine you are sitting on an asteroid in deep space and you have a friend who has a spaceship that can travel at 99% the speed of light. Yes, this is physically impossible for a host of reasons, but bear with me for now. Out of boredom…

Cutting the Gordian Knot

Solving the Most Difficult Problem in Finance Photo: Wikimedia Commons It was considered the hardest problem in antiquity. Every man, woman, and child that had attempted to solve it before had failed. However, Alexander the Great was determined to succeed. Why? As the legend stated, the one who could untie the Gordian Knot would be the…

The Best Way to Lose $5 Billion Dollars

What NOT to Do to Stay Rich, Courtesy of House Vanderbilt The Breakers (Photo: Wikimedia Commons) It was January 4, 1877 and the world’s richest man had just died. Cornelius “The Commodore” Vanderbilt had amassed a fortune of over $100 million over the course of his lifetime as a railroad/transportation pioneer. The Commodore was of…