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The Psychology of Money - Distillation, Chapter 13 - 20

Sat, 22 Mar 2025 00:00:00 +0000

Chapter 13 Room For Error - The most imporant part of every plan is planning on your plan not going according to plan.

Chapter 14 You’ll Change - Long-term planning is harder than it seems because people’s goals and desires change over time.

作者说一个他的朋友的故事来告诉我们人的价值观和世界观是会发生改变的：他的朋友从小相当医生，但是当上医生以后他发现自己很讨厌这个职业。人们的财务规划也是这样，要避免过于极端的财务规划，一剂药接受我们的想法会改变。

Chapter 15 Nothing’s Free - Everything has a price, but not all prices appear on labels.

很多人愿意付车钱，房子钱，但是不愿意付投资的学费，这是为什么呢，因为我们总觉得投资的失败是一种惩罚的罚金，人不愿意交罚金，但是其实投资的失败只是一种消费。

Chapter 16 You & Me - Beware taking financial cues from people playing a different game than you are.

有些人做长线，有些人做短线，没必要和人进行比较。

Chapter 17 The Seduction of Pessimism - Optimism sounds like a sales pitch. Pessimism sounds like someone trying to help you.

人们总对世界负面的言论更加感到有共鸣。比如在大家都狂欢的时候如果有一个人说一些负面的话，大伙儿会觉得这是一个智者，但是如果在大家都悲观的时候有人说积极的话反而会被认为是精神病。

市场会调节，会有负反馈，和人生一样，不会太好，也不会太差。 Progress happens too slowly to notice, but setbacks happen too quickly to ignore.

Chapter 18 When You’ll believe anything - Appleaing fictions, and why stories are more powerful than statistics.

我们有的时候会为自己的想法找借口，编故事，并且我们总认为世界是能被解释的，但其实不是这样的。

Chapter 19 All Together Now - What we’ve learned about the psychology of your own money.

给出了一堆建议，其实我觉得有点空洞+成功学，就不列举了。

Chapter 20 Confessions - The psychology of my own money.

作者讲了一下他和他的老婆都是有相同的价值观，并且一直把自己的物欲过的不那么高。其实我也很希望自己能遇到一个这样的人。

Postscript: A brief history of why the US Consumer thinks the way they do.

大概就是二战结束之后很多人回国没有事情做，没有房子住，
政府把利率调整很低
大家的创新创造了财富
财富被相对平均的分配了
债务上升了，但是工资也上升了，所以整体问题不大
失业率提高，进入经济衰退期
经济继续繁荣了，但是这次收入不再那么平均了
人们的生活方式，比较心理发生了改变
规范被创立了以后，就很难改变，人们还是认为分配的是平均的，想追求和别人相同的生活，但是这样导致了很多借贷。
作者暗示可能会有战争，因为这是一个循环，不知道是什么意思了。

总结

本以为是一本理财的书，没想到读完发现是一本成功学的书，或者是个人提升的书。作者讲了 20 个点，可能会对人的价值观塑造有一些帮助。我读起来感觉不困难，说明这里面很多的价值观和我的价值观是一样的，最喜欢的 chapter 可能是 chpater17，讲了悲观主义为什么会盛行，在这个当今的社会，这点 observation 非常重要，会帮助你对抗很多负面的言论观点。

The Psychology of Money - Distillation, Chapter 1 - 2

Mon, 17 Mar 2025 00:00:00 +0000

Introduction

The author lists two examples: Ronald James, a gas station attendant, managed to save up to 8 million by retirement; Richard Fuscone, a harvard-educated Merrill Lynch executive, declared bankrupt during recession. The author ties to prove that finance is a soft science that does not require a lot of intelligence. Rather it requires behaviors.

Chapter 1. No one’s crazy

The author claims that people with dramatically different experience will make extremely different decisions, but those decisions are all logical to their own minds. To illustrate this point, author lists how stock market price changes differently if you were born in 1950s and 1970s, how inflation rate changes differently if you were born in 1960s and 1990s.

In addition, the author also points out that how we make decisions about money are relatively new to the world, so it’s totally reasonable that there are some decisions that are not the most correct.

Chapter 2. Luck&Risk

Nothing is as good or as bad as it seems. The author lists examples where luck plays in a role at Bill Gates since he was very lucky to be 1 of a million students who get access to computers in high school. On the contrary, Gates’ best friend passed away accidently in a mountain climbing, which is also 1 of 1 million but in a different direction. In investment, it’s hard to separate the luck/risk from the strategy. Therefore, focus less on individual cases but more on broad patterns.

The Psychology of Money - Distillation, Chapter 3 - 12

Mon, 17 Mar 2025 00:00:00 +0000

Chapter 3. Never Enough

The author listed Rajat gupta and Bernie Madoff who both had enormous amount of money ended fraud because they always wanted to make more money even they had a lot already. There is no reason to risk what you have and need for what you don’t have and don’t need. The author also listed the following advices:

The hardes financial skill is getting the goalpost to stop moving.
Social comparison is the problem here.
Enough is not too little.
There are many things never worth risking no matter the potential gain.

Chapter 4. Confounding Compounding

The author used Milankovitch Cycles(a slightly warmer summer cannot melt ice in the winter ended up componudnig to glacier time) to prove that compounding grows faster than you think. In addition, the author also compared James Simons who had 66% return with Warren Buffet with 22% return. The reason why Buffet made more money is not because his strategy outperformed James’, but because Buffet invested longer than James did. Therefore, the author wanted to show that good investing is more about you can stick with it.

Chapter 5. Getting Wealthy vs Staying Wealthy

The author showed us Jesse Livermore, who made a ton of money during recession, ended up losing all his money during his larger bets later, to prove his points that survival is extremely important in investing. The author also shoed that a barbelled ppersonality - optimistic about the future but paranoid about whwat will prevent you from getting to the future - is vital.

Chapter 6. Tails, You Win

The author explained that the reason why Heinz Berggruen could possess massive collection of Picassos, Braques, Klees to the German government was because he invested in lots of other artwork, including those become masterpiece later. In addition, Disney got famous because of Snow White and Seven Dwarfs. The author wanted to prove that anything that is huge, profitable, famous, or influential is the result of tail event. Therefore, it’s okay to fail as long as you try a huge amount. Realizing the power of tail makes you feel less worried about failures because most of things will fail, but the successful things will give you big returns.

Chapter 7. Freedom - Controlling your time is the highest dividend money pays.

The author depicted freedom as you can do what you want, when you want, with who you want, for as long as you want. Money gives you the power of doing so. The author also showed that in previous generations, working requires specific tools, and it’s easy to detach your hand from work just because you get detached from the tool. Nowadays, it’s harder because you work with your brain, and it’s hard to detach from your brain. Then, it’s more cherished that money can give you some freedom.

Chapter 8. Man in the Car Paradox - No one is impressed with your possessions as much as you are.

The author used his own personal anecdote to show that people tend to want wealth to signal to others that they should be liked and admired. But in reality those other people often bypass admiring you, not because they don’t think wealth is admirable, but because they use your wealth as a benchmark for their own desire to be liked and admired. If respect and admiration are your goal, be careful how you seek it.

Chapter 9. Wealth is what you don’t see - Spending money to show people how much money you have is teh fastest way to have less money.

Wealth is what you don’t see.

Chapter 10. Save Money - The only factor you can control generates one of the only things that matter. How wonderful.

Saving rates is the only thing that you can control.
The value of wealth is relative to what you need.
Past a certain level of income, what you need is just what sits below your ego.
So people’s ability to save is more in their control than they think.
And you don’t need a specific reason to save.
That flexibility and control over your time is an unseen return on wealth.

Chapter 11. Reasonable > Rational - Aiming to be mostly reasonable works better than trying to be codly rational.

The author used fever as an example to illustrate that even though fever is rationally good for your body, but people also take pills right away when they have fever because people feel pain. Here, reasonable is bigger than rational. Also, in investment, there are lots of strategies that are rational but not reasonable for people to implement. Rather, it’s more profitable for a person to implement reasonable strategy because in the long run, the market favors long-term strategy and you are more likely to implement a reasonable strategy.

Chapter 12. Surprise - History is a study of change, ironically used as a map of the future.

Things that have never happened before happen all the time. Outlier event move the needle the most. History can be a misleadding guide to the future of the economy and stock market because it doesn’t account for structural chagnes that are relevant to today’s world.