9 Facts You Need To Know To Increase Your Returns
Investing in stocks can be a lot like gambling. Betting whether a stock goes up or down can be as risky as betting on red or black for roulette. There is always an element of luck when using the past to predict the future but do you really understand the past to being with? Is the market in 2014 more resemblance of 2007 or 1938? It has been proven that the worst rated companies have actually had a bigger return than the most admired companies according to Fortune.
Learn about how all these factors and 6 more mind hack that will make you a better investor.
- “Success = talent + luck; Great Success = a little more talent + a lot of luck.”
These formulas illustrate an important theme in the book. Kahneman feels that luck “plays a very large role in every story of success.” A big challenge for investors, of course, is distinguishing between skill and luck. I’ve noticed that the most successful investors rarely acknowledge the latter as playing any role whatsoever until they have a bad year.
One of the biggest takeaways from the article was System 1 and System 2 thinking (this concept is in a lot of business books). System 1 thinking is quick decisions and System 2 thinking is taking some time to analyze your choices. This concept of two systems of thinking you can apply to your entire life not just investing decisions. For example, System 1 thinking can be used when you ask yourself “should I approach that girl?” and you can use System 2 to ask yourself “how can I make this really fun for her?”
About Shaun Archer Tatum Shaun works in corporate finance in New York City. He has done financial consulting for several start-ups and has worked at several Fortune 500 companies. He has contributed several finance/investing articles on Seeking Alpha which have been published on Yahoo! Finance.