|
Point 2: Get Real...as in Reality Based
Human nature tends to be optimistic. We remember the
good and forget the bad. An example of this is the majority of gamblers who
think they made money in Las Vegas. Our mental accounting leads us to a
conclusion that may not be correct since we can rest assured that the
billion dollar casinos are not built to give money away.
The same phenomenon is true when it comes to investing. We believe what we
want to believe. We remember and celebrate the brilliant investments and
forget those that didn’t turn out so great. Wall Street perpetuates this
fantasy since the more we believe the illusion of beating the market, the
more money that can be made from the investor. We are constantly bombarded
with the success stories while the losers are forgotten. Have you ever seen
an advertisement for a Morningstar one star mutual fund?
It’s chasing the illusion of beating the stock market that nearly always
results in the investor giving up most of their real return. If you can give
up this illusion, you may be able to double your REAL return.
< Back
|
