More financial lies that we tell ourselves…
I had done an article saying that we tell each other a lot of financial lies…here is a sequel…
Some more financial lies that we love telling ourselves:
1. I have a DCF model that tells me exactly why Colgate is a good buy.
2. I know the market is fully priced now…the correction is just around the corner.
3. The last 5 years the market has done nothing so in the next 4 years it will double itself – just as a catch up.
4. I have a brilliant, fail safe, trading algorithm. YOU can NEVER ever go wrong with this tool.
5. I will be greedy when others are fearful.
6. I am following Peter Lynch’s advise. I buy the shares of companies whose product I use. I have been doing a SIP in Jet Airways.
7. I know everything about equity markets in India, Singapore and USA.
8. I NEVER make emotional decisions.
9. I know my portfolio returns and total overall asset allocation of my portfolio.
10. Investing is easy
11. Look I am so well educated, that I can walk out of the project ….and find a new one…
12. I will start my SIP next month
13. I will stop doing F n O – just let me do this one trade
14. I will top up my term insurance now that I have a new kid (more loans)….etc.
15. I will start writing accounts diligently so that I know where I am spending MY money.
16. I need not write accounts for expenses – after all I do not spend irresponsibly EVER
17. I do not need to maintain an account of my investments, except of course as required by Law….
…can you add your own list to this?
http://www.subramoney.com/2014/01/financial-lies-that-we-tell-ourselves/
piyush sharda
hi ,
good article
Abhijit
– My friend bought a home and a new luxurious car from his trading profits within2 years…
subra
Abhijit that MAY not be a lie, but it may be perfectly accurate and completely useless information, because if you try it in FnO you may end up losing your car and house…
damodar
Save and then spend
damodar
Subra
Irony Today is World Savings day
milan
What is wrong with point number 14?
The point says:
“I will top up my term insurance now that I have a new kid”
Isn’t term insurance good?
LuckyOye
@milan, the title says ‘lies that we tell’, so what point #14 means is that we *just* say that to ourselves, but we rarely execute it, and end up postponing good decisions.
Point #13 is also good. We easily get addicted to trading, very much like getting addicted to gambling. The chemical reactions in our brain to those *quick* wins are quite real. That’s what prevents us from giving up trading, even if it harms us (financially). Absolutely the same thing as being addicted to tobacco, alcohol, or worse: drugs.
Points 15,16, & 17 are also very good. For a few years, I used to maintain a household balance sheet & income-expense statement every quarter, very much like a company. But then laziness got the better of me (or was it the smart rally in the stock market). Maybe a crash will make me start doing it again. Makes me think that *good* things aren’t always that good.
Finally, since its the season of ‘parda faash’-ing all the lies, with subra’s blessings will point to 2 other articles which we can also explore:
http://awealthofcommonsense.com/lies-investors-tell/
and
http://thereformedbroker.com/2014/10/23/ten-insane-things-we-believe-on-wall-street/
Anshuk Jain
I laughed at this.. I stay in DLF made house.. doesn’t mean that I will invest in DLF
6. I am following Peter Lynch’s advise. I buy the shares of companies whose product I use. I have been doing a SIP in Jet Airways.
Abhijeet Dongre
@Abhijit. There are a lot of people who win lotteries. But a lot more people lose money in lotteries. So its base rate is quite low, which makes it a terrible investment.
@Subra. Sir, I have developed http://www.eqax.com to help fundamental investors by providing them ratings of various parameters used in fundamental analysis for stocks. I would really appreciate your opinion on it. It would mean a lot to me.