A lot of financial advisers try to gauge a client's risk tolerance by asking them how they would feel if the stock market were to fall 30 %. This is not really a forecast of the future, it's just an extrapolation of how you feel to day. So i highly recommend using past behavior and viewing how people acted in the past as a mirror for what they might do in the future. I would tell young people that during the next bear market, you're going to learn about a lot about yourself. And rather than fearing those bad decisions, use them as a base line of learning.
#338: This month, we’re running four episodes based around the four pillars of F.I.R.E. — financial psychology, investing, real estate and entrepreneurship.
Today’s episode, which originally aired in April 2018, offers advice to investors who want to sharpen and hone their competitive edge.
Here are three lessons from this conversation with investment writer Morgan Housel:
Lesson #1: Great investors need patience and humility.
Lesson #2: Read broadly.
Don’t just read books about finance and investing. Read from a broad multi-disciplinary array of subjects, so that you can form a latticework of ideas.
Lesson #3: Play a strong defense.
On the surface, it seems like playing defense is a conservative strategy. Emergency funds and a strong income-producing allocation, for example, both sound conservative.
But in the long-term it could prove to be the opposite.
Enjoy this interview, which originally aired in April 2018.
For more information, visit the show notes at https://affordanything.com/episode338
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