Making Money Do we need to change our minds about index funds?
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Aug 4, 2025 
Tim Harford, an economist and author of 'How To Make The World Add Up', discusses the risks of sticking rigidly to investment strategies in changing markets. He delves into the historical lessons from economists like Fisher and Keynes, emphasizing adaptability. The conversation covers the debate between index funds and actively managed funds, the hidden costs of high management fees, and the necessity of simplifying financial concepts. Tim also addresses the psychological and emotional aspects that influence investing decisions, advocating for mindful, informed approaches to wealth.
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Fisher vs Keynes Investment Stories
- Irving Fisher and John Maynard Keynes were both renowned economists and investors who failed to predict the 1929 crash.
- Fisher was financially ruined while Keynes adapted his strategy and died a millionaire.
Adaptability Beats Stubbornness
- Keynes succeeded financially because he was willing to change his investment strategy after poor performance.
- Flexibility to adapt beats stubbornness in investing and forecasting.
Cult Doubling Down After Failure
- The Seekers cult predicted the end of the world but when it didn't happen, the leader fabricated new alien messages.
- This illustrates how people double down on beliefs rather than admit error when proven wrong.
