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De Psychologie van Geld

In vertaling.

De psychologie van geld is de beste introductie in financiële geletterdheid die ik de afgelopen jaren ben tegengekomen.

Origineel gepubliceerd op collaborativefund.com door Morgan Housel, vrij vertaald door Kobe van Reppelen. Ook beschikbaar in fysieke boekvorm1, gepubliceerd met toestemming van de auteur.


Laat me je het verhaal van twee beleggers vertellen. Twee beleggers die elkaar nooit gekend hebben, maar wiens paden op een interessante manier kruisten.

Grace Groner werd op haar twaalfde een weeskind. Ze trouwde nooit. Ze had geen kinderen. Ze reed nooit met een auto. Ze leefde het grootste deel van haar leven in een één-slaapkamer-appartement en werkte haar hele carrière als secretaresse. Ze was, voor zover we weten, een allerliefste dame. Maar ze leefde een bescheiden en rustig leven. Dat maakte de $7 miljoen die ze in 2010 na haar overlijden aan goede doelen naliet, nadat ze 100 jaar geworden was, eens te verwarrender. Mensen die haar kenden vroegen waar Grace al dat geld gekregen had?

Maar er was geen geheim. Er was geen erfenis. Grace spaarde een bescheiden deeltje van haar mager salaris en genoot tachtig jaar lang van het effect van samengestelde interest in de aandelenmarkt. Dat is alles.

Weken na haar dood kwam een ongerelateerde beleggersverhaal in het nieuws.

Richard Fuscone, voormalig vicevoorzitter van Merrill Lynch’s Latijn-Amerika- divisie, verklaarde zijn persoonlijk bankroet, teneinde zijn twee huizen te beschermen. Eentje daarvan was bijna 2000 vierkante meter groot, en had een maandelijkse hypotheeklast van $66 000. Fuscone was het tegenovergestelde van Grace Groner: opgeleid aan Harvard en de Universiteit van Chicago, en tegen zijn veertigste zo succesvol in de “investment industry”, dat hij vroeg op pensioen ging “om persoonlijke en liefdadige dingen te doen.” Maar zware leningen en illiquide investeringen deden hem de das om. In hetzelfde jaar dat Grace Groner een echt fortuin aan het goede doel naliet, stond Richard voor de rechter en verklaarde hij “dat hij geruïneerd was door de financiële crisis.. De enige vorm van liquiditeit zijn de persoonlijke meubels die mijn vrouw verkocht krijgt.”

Het doel van deze verhalen is niet om te zeggen dat je een Grace moet zijn, of moet vermijden om een Richard te zijn. Het is om te tonen dat er geen enkel ander gebied is waar deze verhalen zelfs mogelijk zijn.

In welk ander gebied kan iemand zonder opleiding, relevante ervaring, geldmiddelen en netwerk beter presteren dan iemand met de beste opleiding, de meest relevante ervaring, de beste middelen en het grootste netwerk? Er is geen enkel verhaal waar Grace Groner een betere openhart-operatie uitvoert dan een cardioloog van Harvard. Of waar ze een betere chip bouwt dan een ingenieur bij Apple. Dat is ondenkbaar.

Maar in de beleggerswereld vind je deze verhalen.

Dat komt doordat beleggen niet om geldbeheer draait. Het gaat over hoe mensen zich gedragen. En gedrag is hard om aan te leren, zelfs aan erg intelligente mensen. Gedrag valt niet samen te vatten in hapklare formules, of uit te drukken in eenvoudige modellen. Gedrag is aangeboren, verschilt per persoon, valt moeilijk te meten, verandert met de tijd, en het bestaan ervan lijkt onzichtbaar voor mensen, zeker wanneer ze over zichzelf praten.

Grace en Richard’s verhaal toont dat het niet per sé uitmaakt wat je weet; wat telt is hoe je je gedraagt. Maar dat is niet hoe geldzaken bestudeerd of bediscussieerd worden. Het financiële bedrijfsleven praat te veel over wat te doen, en te weinig over wat er zich in je hoofd afspeelt wanneer je dat probeert te doen.

Dit artikel beschrijft 20 gebreken, vooroordelen, en oorzaken van slecht gedrag die ik regelmatig bij mensen en hun geld herken.

1. De “verdiend succes en verdiend falen”-denkfout: De neiging om de rol van geluk en risico te onderschatten, en het onvermogen om te zien dat geluk en risico zoals kop en munt zijn.

Ik stel graag de volgende vraag: “Wat weet jij over beleggen wat anderen niet kunnen weten?”

Het is geen handige vraag. Weinig mensen stellen ze. Maar het dwingt de persoon in kwestie om na te denken over wat intuïtief waar lijkt, maar waar hij of zij weinig tijd aan besteedt, omdat het antwoord waardeloos lijkt.

Jaren geleden stelde ik de econoom Robert Shiller deze vraag. He antwoordde: “De exacte rol van geluk bij succesvolle resultaten.”

Daar houd ik van - omdat zo goed als niemand in de financiële wereld de rol van geluk correct inschat. Aangezien het moeilijk is om geluk te meten, en onbeschoft lijkt om iemand’s succes louter aan geluk toe te wijden, is meest voorkomende houding die waar de factor van geluk impliciet genegeerd wordt. Als ik zeg, “dat er één miljard beleggers in de wereld zijn. Is het dan mogelijk dat honderd van hen, voornamelijk door geluk, miljardair worden?” Dan zeg je “ja, natuurlijk.” Maar zou je het ook zo in hun gezicht zeggen? Waarschijnlijk niet, en dat is het probleem.

Hetzelfde geldt voor falen. Probeerden ondernemingen die bankroet gingen niet hard genoeg? Werd er niet voldoende nagedacht over slechte investeringen? Zijn eigenzinnige carrièrepaden het resultaat van luiheid?

In bepaalde mate wel, ja. Natuurlijk. Maar hoeveel, precies? Dat valt erg moeilijk te bepalen. En wanneer iets moeilijk te bepalen is, zoeken we al snel in de extremiteit naar verklaringen, en gaan we ervan uit dat mislukkingen veroorzaakt worden door (bewuste) fouten. Dat idee is op zichzelf al een fout.

Onze levens zijn een reflectie van de ervaringen die we hadden, en de mensen die we tot vandaag ontmoetten. Het overgrote deel daarvan is willekeurig, toevallig, en gebaseerd op geluk. Het onderscheid tussen dapper en roekeloos is kleiner dan we mensen denken, en wanneer je gelooft in het nemen van risico’s, geloof je in de rol van geluk. Het zijn twee zijdes van dezelfde munt. Ze zijn beiden het eenvoudige idee dat er behalve een bewuste inspanning ook andere krachten zijn die een resultaat beïnvloeden.

Ik schreef mijn zoon een brief na zijn geboorte: “Sommige mensen zijn geboren in een familie die de positieve rol van onderwijs benadrukt; andere families zijn daartegen. Sommigen zijn geboren in een bloeiende economie waar ondernemerschap aangemoedigd wordt; andere zijn geboren tussen de puinhopen van oorlog en armoede. Ik wil dat je succesvol bent, en dat je jouw succes verdiend hebt. Maar wees je steeds bewust dat niet elk succes het resultaat van hard werk is, en dat niet alle armoede uit luiheid voortkomt. Houd dat in het achterhoofd wanneer je een oordeel over mensen velt, inclusief jezelf.”

2. Het schade-ontwijken-syndroom: Het onvermogen om de echte kost van een situatie in te schatten, met teveel nadruk op het financiële, ten koste van de emotionele prijskaart die aan een beloning hangt.

Stel dat je een nieuwe auto wil, die $30,000 kost. Je hebt een aantal opties:

1) Koop ‘m voor $30,000.
2) Koop een tweedehands wagen voor minder dan $30,000.
3) Steel de auto.

In dit geval zullen 99% van de mensen optie drie vermijden, omdat de gevolgen van de misdaad zwaarder wegen dan het gewin. Dit ligt voor de hand.

Maar stel je voor dat je 10% jaarlijkse interest over de volgende vijftig jaar wil. Zijn daar geen gevolgen, oftewel, krijg je dit zomaar? Natuurlijk niet. Waarom zou je zoiets geweldigs voor niets krijgen? Net zoals bij de auto is er een prijs die je moet betalen.

De prijs, in dit geval, is volatiliteit en onzekerheid. En net zoals bij de auto, heb je een aantal mogelijkheden: je kan de prijs van volatiliteit en onzekerheid accepteren, en betalen. Je kan een andere bron van inkomsten zoeken, die minder onzeker is en een lagere opbrengst heeft. Dat is het equivalent van de tweedehands wagen. Of je kan het equivalent van de misdaad zoeken: De hoge opbrengst zonder de volatiliteit die daarbij hoort.

In dit scenario zoeken velen de derde optie. Zoals een autodief -hoewel ze goede intenties hebben- verzinnen ze truukjes en strategieën om de opbrengst te krijgen, zonder de volatiliteitsprijs te betalen. Onderhandelen. Uitlenen. Indekken. Arbitrage. Hefbomen. Maar de God van het Geld heeft weinig geduld voor zij die winst zoeken zonder de gepaste prijs te betalen. Sommige misdadigers zullen ermee wegkomen. De meerderheid zal op heterdaad betrapt worden. Hetzelfde geldt voor geldzaken.

Dit ligt voor de hand wanneer je een auto probeert te stelen, maar het is minder duidelijk wanneer je belegt. Dat komt omdat de echte kost van beleggen -en eender wat met geld te maken heeft- zich zelden beperkt tot de financiële kosten, die trouwens makkelijk te zien en meten vallen. Het is de emotionele en fysieke prijs die z’n tol eist. Monster’s aandeel, de energiedrank, schoot tussen 1995 en 2016 met 211000% de hoogte in. Maar vijf keer in die periode, verloor het meer dan de helft van zijn marktwaarde. Dat is een enorme psychologische prijs. Warren Buffet verdiende zo’n $90 miljard. Maar dat deed hij door zeventig jaar lang twaalf uur per dag door SEC-rapporten te speuren, vaak ten koste van zijn familieleven. Ook hier vind je een verborgen kost.

Elke opbrengst heeft een prijs die groter is dan louter de financiële kost die je kan zien en die je kan incalculeren. Die situatie omarmen, is van levensbelang. Scott Adams schreef: “Eén van de beste adviezen die ik ooit hoorde, was ongeveer zo: Als je succes wil moet je de prijs daarvan uitvogelen, en die vervolgens betalen. Het klinkt zo triviaal en logisch, maar als je het idee tot zijn conclusie leidt, is het ongelooflijk krachtig.” Prima geldadvies.

3. De rijke-man-in-de-auto-paradox

Wanneer je iemand in een mooie auto ziet, denk je zelden, “Wow, die gast is best cool.” Wat je denkt is eerder, “Wow, als ik die auto had, zouden mensen mij cool vinden.” Onbewust of niet, zo denken mensen.

De paradox van rijkdom is dat mensen hun vermogen als een signaal willen gebruiken opdat anderen naar hen zouden opkijken. Maar in de realiteit kijken ze helemaal niet naar je op. Niet omdat je vermogen niet bewonderenswaardig is, maar omdat ze jouw vermogen gebruiken als een maatstaf waartegen ze hun eigen verlangen om bewonderd te worden, aftoetsen.

Dit soort dingen zijn niet subtiel. Het komt op elk inkomen- en vermogensniveau voor. Er is een steeds grote groep mensen die privéjets voor tien minuten huren, waar ze een selfie voor hun Instagram maken. Ze denken dat deze selfies de bewondering van andere mensen oproepen, en staan geen moment stil bij de eigenaar van de jet, behalve dan dat die hen een dienst bewees door zijn vliegtuig uit te lenen.

Het is niet de bedoeling om de jacht op rijkdom of flitsende wagens te staken, integendeel. Ik houd van beiden. De kern is dat we ernaar streven om door anderen gerespecteerd te worden, en dat nederigheid, hoffelijkheid en empathie meer respect afdwingen dan snelle auto’s.

4. De neiging om naar huidige omstandigheden aan te passen en daarmee toekomstige wensen of acties te bemoeilijken, met als resultaat het onvermogen om lange-termijn samengestelde beloningen te genieten, dankzij beslissingen in het heden.

Elke vijfjarige jongen wil met een tractor rijden wanneer ze opgroeien. Dan groeien ze op en merken ze dat een tractor misschien toch niet de beste carrièremogelijkheden biedt. Als tiener droom je om advocaat te worden. Later besef je dat advocaten zo hard werken dat ze hun familie nauwelijks zien. Dus word je een huisvader of -moeder. Op je zeventigste besef je dat je meer geld voor je pensioen had moeten sparen.

Dingen veranderen. En het is moeilijk om op lange termijn te beslissen wanneer je idee over de toekomst onderhevig is aan verandering.

Dit slaat terug op de eerste regel van samengestelde effecten: onderbreek het nooit nodeloos. Maar hoe onderbreek je een geldplan -carrière, investeringen, uitgaves, budgetten, wat dan ook- niet wanneer je leven verandert? Dat is moeilijk. Een deel van de reden waarom mensen als Grace Groner en Warren Buffett zo succesvol worden is omdat ze hetzelfde ding decennialang bleven doen, en de vruchten van compounding effect plukten. Maar de meesten van ons evolueren zo intens over een leven, dat we dezelfde dingen niet decennialang willen blijven doen. Of zelfs iets wat erop lijkt2. Dus in plaats van één 80-jarige periode, geven we ons geld eerder vier 20-jarige blokken. Het effect van samengestelde rente werkt niet zo goed in dat laatste scenario.

Er is geen oplossing voor dit probleem. Maar één nuttig ding dat ik geleerd heb is het (terug)vinden van je balans en een foutenmarge laten. Te weinig toewijding aan één doel, één pad, één uitkomst, betekent een zekere spijt wanneer je zo onderhevig bent aan verandering.

5. Anchored-to-your-own-history bias: Your personal experiences make up maybe 0.00000001% of what’s happened in the world but maybe 80% of how you think the world works.

If you were born in 1970 the stock market went up 10-fold adjusted for inflation in your teens and 20s – your young impressionable years when you were learning baseline knowledge about how investing and the economy work. If you were born in 1950, the same market went exactly nowhere in your teens and 20s:

Born in 1970

There are so many ways to cut this idea. Someone who grew up in Flint, Michigan got a very different view of the importance of manufacturing jobs than someone who grew up in Washington D.C. Coming of age during the Great Depression, or in war-ravaged 1940s Europe, set you on a path of beliefs, goals, and priorities that most people reading this, including myself, can’t fathom.

The Great Depression scared a generation for the rest of their lives. Most of them, at least. In 1959 John F. Kennedy was asked by a reporter what he remembered from the depression, and answered: I have no first-hand knowledge of the depression. My family had one of the great fortunes of the world and it was worth more than ever then. We had bigger houses, more servants, we traveled more. About the only thing that I saw directly was when my father hired some extra gardeners just to give them a job so they could eat. I really did not learn about the depression until I read about it at Harvard.

Since no amount of studying or open-mindedness can genuinely recreate the power of fear and uncertainty, people go through life with totally different views on how the economy works, what it’s capable of doing, how much we should protect other people, and what should and shouldn’t be valued.

The problem is that everyone needs a clear explanation of how the world works to keep their sanity. It’s hard to be optimistic if you wake up in the morning and say, “I don’t know why most people think the way they do,” because people like the feeling of predictability and clean narratives. So they use the lessons of their own life experiences to create models of how they think the world should work – particularly for things like luck, risk, effort, and values.

And that’s a problem. When everyone has experienced a fraction of what’s out there but uses those experiences to explain everything they expect to happen, a lot of people eventually become disappointed, confused, or dumbfounded at others’ decisions.

A team of economists once crunched the data on a century’s worth of people’s investing habits and concluded: “Current [investment] beliefs depend on the realizations experienced in the past.”

Keep that quote in mind when debating people’s investing views. Or when you’re confused about their desire to hoard or blow money, their fear or greed in certain situations, or whenever else you can’t understand why people do what they do with money. Things will make more sense.

6. Historians are Prophets fallacy: Not seeing the irony that history is the study of surprises and changes while using it as a guide to the future. An overreliance on past data as a signal to future conditions in a field where innovation and change is the lifeblood of progress.

Geologists can look at a billion years of historical data and form models of how the earth behaves. So can meteorologists. And doctors – kidneys operate the same way in 2018 as they did in 1018.

The idea that the past offers concrete directions about the future is tantalizing. It promotes the idea that the path of the future is buried within the data. Historians – or anyone analyzing the past as a way to indicate the future – are some of the most important members of many fields.

I don’t think finance is one of them. At least not as much as we’d like to think.

The cornerstone of economics is that things change over time, because the invisible hand hates anything staying too good or too bad indefinitely. Bill Bonner once described how Mr. Market works: “He’s got a ‘Capitalism at Work’ T-shirt on and a sledgehammer in his hand.” Few things stay the same for very long, which makes historians something far less useful than prophets.

Consider a few big ones.

The 401(K) is 39 years old – barely old enough to run for president. The Roth IRA isn’t old enough to drink. So personal financial advice and analysis about how Americans save for retirement today is not directly comparable to what made sense just a generation ago. Things changed.

The venture capital industry barely existed 25 years ago. There are single funds today that are larger than the entire industry was a generation ago. Phil Knight wrote about his early days after starting Nike: “There was no such thing as venture capital. An aspiring young entrepreneur had very few places to turn, and those places were all guarded by risk-averse gatekeepers with zero imagination. In other words, bankers.” So our knowledge of backing entrepreneurs, investment cycles, and failure rates, is not something we have a deep base of history to learn from. Things changed.

Or take public markets. The S&P 500 did not include financial stocks until 1976; today, financials make up 16% of the index. Technology stocks were virtually nonexistent 50 years ago. Today, they’re more than a fifth of the index. Accounting rules have changed over time. So have disclosures, auditing, and market liquidity. Things changed.

The most important driver of anything tied to money is the stories people tell themselves and the preferences they have for goods and services. Those things don’t tend to sit still. They change with culture and generation. And they’ll keep changing.

The mental trick we play on ourselves here is an over-admiration of people who have been there, done that, when it comes to money. Experiencing specific events does not necessarily qualify you to know what will happen next. In fact it rarely does, because experience leads to more overconfidence than prophetic ability.

That doesn’t mean we should ignore history when thinking about money. But there’s an important nuance: The further back in history you look, the more general your takeaways should be. General things like people’s relationship to greed and fear, how they behave under stress, and how they respond to incentives tends to be stable in time. The history of money is useful for that kind of stuff. But specific trends, specific trades, specific sectors, and specific causal relationships are always a showcase of evolution in progress.

7. The seduction of pessimism in a world where optimism is the most reasonable stance.

Historian Deirdre McCloskey says, “For reasons I have never understood, people like to hear that the world is going to hell.”

This isn’t new. John Stuart Mill wrote in the 1840s: “I have observed that not the man who hopes when others despair, but the man who despairs when others hope, is admired by a large class of persons as a sage.”

Part of this is natural. We’ve evolved to treat threats as more urgent than opportunities. Buffett says, “In order to succeed, you must first survive.”

But pessimism about money takes a different level of allure. Say there’s going to be a recession and you will get retweeted. Say we’ll have a big recession and newspapers will call you. Say we’re nearing the next Great Depression and you’ll get on TV. But mention that good times are ahead, or markets have room to run, or that a company has huge potential, and a common reaction from commentators and spectators alike is that you are either a salesman or comically aloof of risks.

A few things are going on here.

One is that money is ubiquitous, so something bad happening tends to affect everyone, albeit in different ways. That isn’t true of, say, weather. A hurricane barreling down on Florida poses no direct risk to 92% of Americans. But a recession barreling down on the economy could impact every single person – including you, so pay attention. This goes for something as specific as the stock market: More than half of all households directly own stocks.

Another is that pessimism requires action – Move! Get out! Run! Sell! Hide! Optimism is mostly a call to stay the course and enjoy the ride. So it’s not nearly as urgent.

A third is that there is a lot of money to be made in the finance industry, which – despite regulations – has attracted armies of scammers, hucksters, and truth-benders promising the moon. A big enough bonus can convince even honest, law-abiding finance workers selling garbage products that they’re doing good for their customers. Enough people have been bamboozled by the finance industry that a sense of, “If it sounds too good to be true, it probably is” has enveloped even rational promotions of optimism.

Most promotions of optimism, by the way, are rational. Not all, of course. But we need to understand what optimism is. Real optimists don’t believe that everything will be great. That’s complacency. Optimism is a belief that the odds of a good outcome are in your favor over time, even when there will be setbacks along the way. The simple idea that most people wake up in the morning trying to make things a little better and more productive than wake up looking to cause trouble is the foundation of optimism. It’s not complicated. It’s not guaranteed, either. It’s just the most reasonable bet for most people. The late statistician Hans Rosling put it differently: “I am not an optimist. I am a very serious possibilist.”

8. Underappreciating the power of compounding, driven by the tendency to intuitively think about exponential growth in linear terms.

IBM made a 3.5 megabyte hard drive in the 1950s. By the 1960s things were moving into a few dozen megabytes. By the 1970s, IBM’s Winchester drive held 70 megabytes. Then drives got exponentially smaller in size with more storage. A typical PC in the early 1990s held 200-500 megabytes.

And then … wham. Things exploded.

1999 – Apple’s iMac comes with a 6 gigabyte hard drive.

2003 – 120 gigs on the Power Mac.

2006 – 250 gigs on the new iMac.

2011 – first 4 terabyte hard drive.

2017 – 60 terabyte hard drives.

Now put it together. From 1950 to 1990 we gained 296 megabytes. From 1990 through today we gained 60 million megabytes.

The punchline of compounding is never that it’s just big. It’s always – no matter how many times you study it – so big that you can barely wrap your head around it. In 2004 Bill Gates criticized the new Gmail, wondering why anyone would need a gig of storage. Author Steven Levy wrote, “Despite his currency with cutting-edge technologies, his mentality was anchored in the old paradigm of storage being a commodity that must be conserved.” You never get accustomed to how quickly things can grow.

I have heard many people say the first time they saw a compound interest table – or one of those stories about how much more you’d have for retirement if you began saving in your 20s vs. your 30s – changed their life. But it probably didn’t. What it likely did was surprise them, because the results intuitively didn’t seem right. Linear thinking is so much more intuitive than exponential thinking. Michael Batnick once explained it. If I ask you to calculate 8+8+8+8+8+8+8+8+8 in your head, you can do it in a few seconds (it’s 72). If I ask you to calculate 8x8x8x8x8x8x8x8x8, your head will explode (it’s 134,217,728).

The danger here is that when compounding isn’t intuitive, we often ignore its potential and focus on solving problems through other means. Not because we’re overthinking, but because we rarely stop to consider compounding potential.

There are over 2,000 books picking apart how Warren Buffett built his fortune. But none are called “This Guy Has Been Investing Consistently for Three-Quarters of a Century.” But we know that’s the key to the majority of his success; it’s just hard to wrap your head around that math because it’s not intuitive. There are books on economic cycles, trading strategies, and sector bets. But the most powerful and important book should be called “Shut Up And Wait.” It’s just one page with a long-term chart of economic growth. Physicist Albert Bartlett put it: “The greatest shortcoming of the human race is our inability to understand the exponential function.”

The counterintuitiveness of compounding is responsible for the majority of disappointing trades, bad strategies, and successful investing attempts. Good investing isn’t necessarily about earning the highest returns, because the highest returns tend to be one-off hits that kill your confidence when they end. It’s about earning pretty good returns that you can stick with for a long period of time. That’s when compounding runs wild.

9. Attachment to social proof in a field that demands contrarian thinking to achieve above-average results.

The Berkshire Hathaway annual meeting in Omaha attracts 40,000 people, all of whom consider themselves contrarians. People show up at 4 am to wait in line with thousands of other people to tell each other about their lifelong commitment to not following the crowd. Few see the irony.

Anything worthwhile with money has high stakes. High stakes entail risks of being wrong and losing money. Losing money is emotional. And the desire to avoid being wrong is best countered by surrounding yourself with people who agree with you. Social proof is powerful. Someone else agreeing with you is like evidence of being right that doesn’t have to prove itself with facts. Most people’s views have holes and gaps in them, if only subconsciously. Crowds and social proof help fill those gaps, reducing doubt that you could be wrong.

The problem with viewing crowds as evidence of accuracy when dealing with money is that opportunity is almost always inversely correlated with popularity. What really drives outsized returns over time is an increase in valuation multiples, and increasing valuation multiples relies on an investment getting more popular in the future – something that is always anchored by current popularity.

Here’s the thing: Most attempts at contrarianism is just irrational cynicism in disguise – and cynicism can be popular and draw crowds. Real contrarianism is when your views are so uncomfortable and belittled that they cause you to second guess whether they’re right. Very few people can do that. But of course that’s the case. Most people can’t be contrarian, by definition. Embrace with both hands that, statistically, you are one of those people.

Harry Markowitz won the Nobel Prize in economics for creating formulas that tell you exactly how much of your portfolio should be in stocks vs. bonds depending on your ideal level of risk. A few years ago the Wall Street Journal asked him how, given his work, he invests his own money. He replied: I visualized my grief if the stock market went way up and I wasn’t in it – or if it went way down and I was completely in it. My intention was to minimize my future regret. So I split my contributions 50/50 between bonds and equities.

There are many things in academic finance that are technically right but fail to describe how people actually act in the real world. Plenty of academic finance work is useful and has pushed the industry in the right direction. But its main purpose is often intellectual stimulation and to impress other academics. I don’t blame them for this or look down upon them for it. We should just recognize it for what it is.

One study I remember showed that young investors should use 2x leverage in the stock market, because – statistically – even if you get wiped out you’re still likely to earn superior returns over time, as long as you dust yourself off and keep investing after a wipeout. Which, in the real world, no one would actually do. They’d swear off investing for life. What works on a spreadsheet and what works at the kitchen table are ten miles apart.

The disconnect here is that academics typically desire very precise rules and formulas. But real-world people use it as a crutch to try to make sense of a messy and confusing world that, by its nature, eschews precision. Those are opposite things. You cannot explain randomness and emotion with precision and reason.

People are also attracted to the titles and degrees of academics because finance is not a credential-sanctioned field like, say, medicine is. So the appearance of a Ph.D stands out. And that creates an intense appeal to academia when making arguments and justifying beliefs – “According to this Harvard study …” or “As Nobel Prize winner so and so showed …” It carries so much weight when other people cite, “Some guy on CNBC from an eponymous firm with a tie and a smile.” A hard reality is that what often matters most in finance will never win a Nobel Prize: Humility and room for error.

11. The social utility of money coming at the direct expense of growing money; wealth is what you don’t see.

I used to park cars at a hotel. This was in the mid-2000s in Los Angeles, when real estate money flowed. I assumed that a customer driving a Ferrari was rich. Many were. But as I got to know some of these people, I realized they weren’t that successful. At least not nearly what I assumed. Many were mediocre successes who spent most of their money on a car.

If you see someone driving a $200,000 car, the only data point you have about their wealth is that they have $200,000 less than they did before they bought the car. Or they’re leasing the car, which truly offers no indication of wealth.

We tend to judge wealth by what we see. We can’t see people’s bank accounts or brokerage statements. So we rely on outward appearances to gauge financial success. Cars. Homes. Vacations. Instagram photos.

But this is America, and one of our cherished industries is helping people fake it until they make it.

Wealth, in fact, is what you don’t see. It’s the cars not purchased. The diamonds not bought. The renovations postponed, the clothes forgone and the first-class upgrade declined. It’s assets in the bank that haven’t yet been converted into the stuff you see.

But that’s not how we think about wealth, because you can’t contextualize what you can’t see.

Singer Rihanna nearly went broke after overspending and sued her financial advisor. The advisor responded: “Was it really necessary to tell her that if you spend money on things, you will end up with the things and not the money?”

You can laugh. But the truth is, yes, people need to be told that. When most people say they want to be a millionaire, what they really mean is “I want to spend a million dollars,” which is literally the opposite of being a millionaire. This is especially true for young people.

A key use of wealth is using it to control your time and providing you with options. Financial assets on a balance sheet offer that. But they come at the direct expense of showing people how much wealth you have with material stuff.

12. A tendency toward action in a field where the first rule of compounding is to never interrupt it unnecessarily.

If your sink breaks, you grab a wrench and fix it. If your arm breaks, you put it in a cast.

What do you do when your financial plan breaks?

The first question – and this goes for personal finance, business finance, and investing plans – is how do you know when it’s broken?

A broken sink is obvious. But a broken investment plan is open to interpretation. Maybe it’s just temporarily out of favor? Maybe you’re experiencing normal volatility? Maybe you had a bunch of one-off expenses this quarter but your savings rate is still adequate? It’s hard to know.

When it’s hard to distinguish broken from temporarily out of favor, the tendency is to default to the former, and spring into action. You start fiddling with the knobs to find a fix. This seems like the responsible thing to do, because when virtually everything else in your life is broken, the correct action is to fix it.

There are times when money plans need to be fixed. Oh, are there ever. But there is also no such thing as a long-term money plan that isn’t susceptible to volatility. Occasional upheaval is usually part of a standard plan.

When volatility is guaranteed and normal, but is often treated as something that needs to be fixed, people take actions that ultimately just interrupts the execution of a good plan. “Don’t do anything,” are the most powerful words in finance. But they are both hard for individuals to accept and hard for professionals to charge a fee for. So, we fiddle. Far too much.

13. Underestimating the need for room for error, not just financially but mentally and physically.

Ben Graham once said, “The purpose of the margin of safety is to render the forecast unnecessary.”

There is so much wisdom in this quote. But the most common response, even if subconsciously, is, “Thanks Ben. But I’m good at forecasting.”

People underestimate the need for room for error in almost everything they do that involves money. Two things cause this: One is the idea that your view of the future is right, driven by the uncomfortable feeling that comes from admitting the opposite. The second is that you’re therefore doing yourself economic harm by not taking actions that exploit your view of the future coming true.

But room for error is underappreciated and misunderstood. It’s often viewed as a conservative hedge, used by those who don’t want to take much risk or aren’t confident in their views. But when used appropriately it’s the opposite. Room for error lets you endure, and endurance lets you stick around long enough to let the odds of benefiting from a low- probability outcome fall in your favor. The biggest gains occur infrequently, either because they don’t happen often or because they take time to compound. So the person with enough room for error in part of their strategy to let them endure hardship in the other part of their strategy has an edge over the person who gets wiped out, game over, insert more tokens, when they’re wrong.

There are also multiple sides to room for error. Can you survive your assets declining by 30%? On a spreadsheet, maybe yes – in terms of actually paying your bills and staying cash-flow positive. But what about mentally? It is easy to underestimate what a 30% decline does to your psyche. Your confidence may become shot at the very moment opportunity is at its highest. You – or your spouse – may decide it’s time for a new plan, or new career. I know several investors who quit after losses because they were exhausted. Physically exhausted. Spreadsheets can model the historic frequency of big declines. But they cannot model the feeling of coming home, looking at your kids, and wondering if you’ve made a huge mistake that will impact their lives.

14. A tendency to be influenced by the actions of other people who are playing a different financial game than you are.

Cisco stock went up three-fold in 1999. Why? Probably not because people actually thought the company was worth $600 billion. Burton Malkiel once pointed out that Cisco’s implied growth rate at that valuation meant it would become larger than the entire U.S. economy within 20 years.

Its stock price was going up because short-term traders thought it would keep going up. And they were right, for a long time. That was the game they were playing – “this stock is trading for $60 and I think it’ll be worth $65 before tomorrow.”

But if you were a long-term investor in 1999, $60 was the only price available to buy. So you may have looked around and said to yourself, “Wow, maybe others know something I don’t.” And you went along with it. You even felt smart about it. But then the traders stopped playing their game, and you – and your game – was annihilated.

What you don’t realize is that the traders moving the marginal price are playing a totally different game than you are. And if you start taking cues from people playing a different game than you are, you are bound to be fooled and eventually become lost, since different games have different rules and different goals.

Few things matter more with money than understanding your own time horizon and not being persuaded by the actions and behaviors of people playing different games.

This goes beyond investing. How you save, how you spend, what your business strategy is, how you think about money, when you retire, and how you think about risk may all be influenced by the actions and behaviors of people who are playing different games than you are.

Personal finance is deeply personal, and one of the hardest parts is learning from others while realizing that their goals and actions might be miles removed from what’s relevant to your own life.

15. An attachment to financial entertainment due to the fact that money is emotional, and emotions are revved up by argument, extreme views, flashing lights, and threats to your wellbeing.

If the average American’s blood pressure went up by 3%, my guess is a few newspapers would cover it on page 16, nothing would change, and we’d move on. But if the stock market falls 3%, well, no need to guess how we might respond. This is from 2015: “President Barack Obama has been briefed on Monday’s choppy global market movement.”

Why does financial news of seemingly low importance overwhelm news that is objectively more important?

Because finance is entertaining in a way other things – orthodontics, gardening, marine biology – are not. Money has competition, rules, upsets, wins, losses, heroes, villains, teams, and fans that makes it tantalizingly close to a sporting event. But it’s even an addiction level up from that, because money is like a sporting event where you’re both the fan and the player, with outcomes affecting you both emotionally and directly.

Which is dangerous.

It helps, I’ve found, when making money decisions to constantly remind yourself that the purpose of investing is to maximize returns, not minimize boredom. Boring is perfectly fine. Boring is good. If you want to frame this as a strategy, remind yourself: opportunity lives where others aren’t, and others tend to stay away from what’s boring.

16. Optimism bias in risk-taking, or “Russian Roulette should statistically work” syndrome: An over attachment to favorable odds when the downside is unacceptable in any circumstance.

Nassim Taleb says, “You can be risk loving and yet completely averse to ruin.”

The idea is that you have to take risk to get ahead, but no risk that could wipe you out is ever worth taking. The odds are in your favor when playing Russian Roulette. But the downside is never worth the potential upside.

The odds of something can be in your favor – real estate prices go up most years, and most years you’ll get a paycheck every other week – but if something has 95% odds of being right, then 5% odds of being wrong means you will almost certainly experience the downside at some point in your life. And if the cost of the downside is ruin, the upside the other 95% of the time likely isn’t worth the risk, no matter how appealing it looks.

Leverage is the devil here. It pushes routine risks into something capable of producing ruin. The danger is that rational optimism most of the time masks the odds of ruin some of the time in a way that lets us systematically underestimate risk. Housing prices fell 30% last decade. A few companies defaulted on their debt. This is capitalism – it happens. But those with leverage had a double wipeout: Not only were they left broke, but being wiped out erased every opportunity to get back in the game at the very moment opportunity was ripe. A homeowner wiped out in 2009 had no chance of taking advantage of cheap mortgage rates in 2010. Lehman Brothers had no chance of investing in cheap debt in 2009.

My own money is barbelled. I take risks with one portion and am a terrified turtle with the other. This is not inconsistent, but the psychology of money would lead you to believe that it is. I just want to ensure I can remain standing long enough for my risks to pay off. Again, you have to survive to succeed.

A key point here is that few things in money are as valuable as options. The ability to do what you want, when you want, with who you want, and why you want, has infinite ROI.

17. Een voorkeur voor vakkundigheid in een vak waar kunde ondergeschikt is aan juist gedrag.

Hier komen Grace en Richard terug. Er is een prioriteiten-hiërarchie voor beleggers, en elk onderwerp moet in orde zijn alvorens je omhoog gaat: (grafiek pyramide belasting)

Richard was erg bedreven aan de top van de pyramide, maar hij faalde onderaan, wat de rest irrelevant maakte. Grace was meester van de onderste bouwstenen, waardoor de bovensten amper in beeld kwamen.

18. Denial of inconsistencies between how you think the world should work and how the world actually works, driven by a desire to form a clean narrative of cause and effect despite the inherent complexities of everything involving money.

Someone once described Donald Trump as “Unable to distinguish between what happened and what he thinks should have happened.” Politics aside, I think everyone does this.

There are three parts to this:

Since everyone wants to explain what they see and how the world works with clean narratives, inconsistencies between what we think should happen and what actually happens are buried.

An example. Higher taxes should slow economic growth – that’s a common sense narrative. But the correlation between tax rates and growth rates is hard to spot. So, if you hold onto the narrative between taxes and growth, you say there must be something wrong with the data. And you may be right! But if you come across someone else pushing aside data to back up their narrative – say, arguing that hedge funds have to generate alpha, otherwise no one would invest in them – you spot what you consider a bias. There are a thousand other examples. Everyone just believes what they want to believe, even when the evidence shows something else. Stories over statistics.

Accepting that everything involving money is driven by illogical emotions and has more moving parts than anyone can grasp is a good start to remembering that history is the study of things happening that people didn’t think would or could happen. This is especially true with money.

19. Political beliefs driving financial decisions, influenced by economics being a misbehaved cousin of politics.

I once attended a conference where a well known investor began his talk by saying, “You know when President Obama talks about clinging to guns and bibles? That is me, folks. And I’m going to tell you today about how his reckless policies are impacting the economy.”

I don’t care what your politics are, there is no possible way you can make rational investment decisions with that kind of thinking.

But it’s fairly common. Look at what happens in 2016 on this chart. The rate of GDP growth, jobs growth, stock market growth, interest rates – go down the list – did not materially change. Only the president did: (grafiek democraten republikeinen)

Years ago I published a bunch of economic performance numbers by president. And it drove people crazy, because the data often didn’t mesh with how they thought it should based on their political beliefs. Soon after a journalist asked me to comment on a story detailing how, statistically, Democrats preside over stronger economies than Republicans. I said you couldn’t make that argument because the sample size is way too small. But he pushed and pushed, and wrote a piece that made readers either cheer or sweat, depending on their beliefs.

The point is not that politics don’t influence the economy. But the reason this is such a sensitive topic is because the data often surprises the heck out of people, which itself is a reason to realize that the correlation between politics and economics isn’t as clear as you’d like to think it is.

20. The three-month bubble: Extrapolating the recent past into the near future, and then overestimating the extent to which whatever you anticipate will happen in the near future will impact your future.

News headlines in the month after 9/11 are interesting. Few entertain the idea that the attack was a one-off; the next massive terrorist attack was certain to be around the corner. “Another catastrophic terrorist attack is inevitable and only a matter of time,” one defense analyst said in 2002. “A top counterterrorism official says it’s ‘a question of when, not if,” wrote another headline. Beyond the anticipation that another attack was imminent was a belief that it would affect people the same way. The Today Show ran a segment pitching parachutes for office workers to keep under their desks in case they needed to jump out of a skyscraper.

Believing that what just happened will keep happening shows up constantly in psychology. We like patterns and have short memories. The added feeling that a repeat of what just happened will keep affecting you the same way is an offshoot. And when you’re dealing with money it can be a torment.

Every big financial win or loss is followed by mass expectations of more wins and losses. With it comes a level of obsession over the effects of those events repeating that can be wildly disconnected from your long- term goals. Example: The stock market falling 40% in 2008 was followed, uninterrupted for years, with forecasts of another impending plunge. Expecting what just happened to happen soon again is one thing, and an error in itself. But not realizing that your long-term investing goals could remain intact, unharmed, even if we have another big plunge, is the dangerous byproduct of recency bias. “Markets tend to recover over time and make new highs” was not a popular takeaway from the financial crisis; “Markets can crash and crashes suck,” was, despite the former being so much more practical than the latter.

Most of the time, something big happening doesn’t increase the odds of it happening again. It’s the opposite, as mean reversion is a merciless law of finance. But even when something does happen again, most of the time it doesn’t – or shouldn’t – impact your actions in the way you’re tempted to think, because most extrapolations are short term while most goals are long term. A stable strategy designed to endure change is almost always superior to one that attempts to guard against whatever just happened happening again.

If there’s a common denominator in these, it’s a preference for humility, adaptability, long time horizons, and skepticism of popularity around anything involving money. Which can be summed up as: Be prepared to roll with the punches.

Jiddu Krishnamurti spent years giving spiritual talks. He became more candid as he got older. In one famous talk, he asked the audience if they’d like to know his secret.

Hij fluisterde, “You see, I don’t mind what happens.”

Dat is misschien de meest relevante vuistregel voor de psychology van geld.


Woordenboek

Liquiditeit; mate waarin je een investering of belegging contant kan uitkeren. Geld op een rekening is meer liquide dan het geld dat je uit een eigendom zoals een huis kan halen.

SEC;

  1. Link naar boek. 

  2. Denk aan de momenteel populaire “carriereswitch.”