this is a good piece of advice for investment. it was written in November 2014 by Jason Zweig.

I was once asked, at a journalism conference, how I defined my job. I said: My job is to write the exact same thing between 50 and 100 times a year in such a way that neither my editors nor my readers will ever think I am repeating myself.

That’s because good advice rarely changes, while markets change constantly. The temptation to pander is almost irresistible. And while people need good advice, what they want is advice that sounds good.

The advice that sounds the best in the short run is always the most dangerous in the long run. Everyone wants the secret, the key, the roadmap to the primrose path that leads to El Dorado: the magical low-risk, high-return investment that can double your money in no time. Everyone wants to chase the returns of whatever has been hottest and to shun whatever has gone cold. Most financial journalism, like most of Wall Street itself, is dedicated to a basic principle of marketing: When the ducks quack, feed ‘em.

As the founder of security analysis, Benjamin Graham, wrote in The Intelligent Investor in 1949: “The investor’s chief problem – and even his worst enemy – is likely to be himself.”

From financial history and from my own experience, I long ago concluded that regression to the mean is the most powerful law in financial physics: Periods of above-average performance are inevitably followed by below-average returns, and bad times inevitably set the stage for surprisingly good performance.

But humans perceive reality in short bursts and streaks, making a long-term perspective almost impossible to sustain – and making most people prone to believing that every blip is the beginning of a durable opportunity.

My role, therefore, is to bet on regression to the mean even as most investors, and financial journalists, are betting against it. I try to talk readers out of chasing whatever is hot and, instead, to think about investing in what is not hot. Instead of pandering to investors’ own worst tendencies, I try to push back. My role is also to remind them constantly that knowing what not to do is much more important than what to do. Approximately 99% of the time, the single most important thing investors should do is absolutely nothing.

“No individual can assist or save the age. He can only express that it is lost.” Without a moment’s hesitation, my dad retorted: “He’s right. But that’s exactly why you must try to assist and save the age.”

I guess this is another way to say that “the pessimist is right but the optimist wins.”

Another piece of advice from C.S.Lewis: “Write about what really interests you, whether it is real things or imaginary things, and nothing else."

  • In the end, the fact of the matter is: if you want to be good, you really don’t have a lot of choices. Cause it takes what it takes.

Angus Deaton and his book, The Great Escape

Angus Deaton was born in 1945. he is an economist and academic. he was awarded the Nobel Prize in Economics in 2015. below are some quotes from his book, The Great Escape: health, wealth, and the origins of inequality.

If poverty is not a result of lack of resources or opportunities, but of poor institutions, poor government, and toxic politics, giving money to poor countries—particularly giving money to the governments of poor countries—is likely to perpetuate and prolong poverty, not eliminate it.

To worry about these consequences of extreme inequality has nothing to do with being envious of the rich and everything to with the fear that rapidly growing top incomes are a threat to the wellbeing of everyone else.

We should also be careful not to count the “leisure” of the unemployed as a benefit. Those who have lost their jobs are not choosing to spend more time at home, and study after study has documented that unemployed people are among the most dissatisfied with their lives.

Economists focus on income, public health scholars focus on mortality and morbidity, and demographers focus on births, deaths, and the size of populations. All of these factors contribute to wellbeing, but none of them is wellbeing.

This book is about the endless dance between progress and inequality, about how progress creates inequality, and how inequality can sometimes be helpful—showing others the way, or providing incentives for catching up—and sometimes unhelpful—when those who have escaped protect their positions by destroying the escape routes behind them.

Indeed, as we shall see, it is a bad mistake to confuse life satisfaction and happiness; the former is an overall judgment about life that comes from consideration, while the latter is an emotion, a mood, or a feeling, which is part of experiencing life.

If democracy becomes plutocracy, those who are not rich are effectively disenfranchised. Justice Louis Brandeis famously argued that the United States could have either democracy or wealth concentrated in the hands of a few, but not both. The political equality that is required by democracy is always under threat from economic inequality, and the more extreme the economic inequality, the greater the threat to democracy.

Leisure time is not counted at all; if people decide to work less, and take more time for things they value more than work, national income and consumers’ expenditure will fall. One reason that French GDP per capita is lower than American GDP per capita is because the French take longer holidays, but it is hard to argue that they are worse off as a result. Nor do we count services that are not sold in the market, so that if a woman works at home to care for her family, it is not counted, but if she works in someone else’s home to care for their family, it is counted, and national income will be higher.

If everyone were free to migrate from one country to another, wages in rich countries would fall and wages in poor countries would rise, and the world would be a much more equal place. Of course, opposition to lower wages in rich countries is precisely why people are not permitted to migrate at will, and it is why meals and haircuts are so cheap in poor countries. The price of land, like the price of labor, cannot be arbitraged between rich countries and poor countries. Cheap housing in India or Africa cannot be brought up to American prices by simply moving the land across the ocean. The presence of cheap land and cheap labor in poor countries explains why price levels in poor countries are so much lower than in rich countries. The market sets the exchange rate to equalize the prices of steel, gasoline, automobiles, and computers—everything that can be and is part of international trade—but the price level depends on goods and services that cannot be traded. Because those are cheaper in poor places, the poorer the country, the lower are the average prices.

The evolution of income can be looked at from three different perspectives: growth, poverty, and inequality. Growth is about the average and how it changes, poverty about the bottom, and inequality about how widely incomes are spread across families or people.

John Kay

John Kay was born in 1948 in Edinburg, Scotland. He is a British economist. His books inclueds Other People’s Money: The Real Business of Finance (2015), The Truth about market (2005) and so on.

Ideas shape the course of history.

But my lord, when we addressed this issue a few years ago, didn’t you argue the other side?" He said, “That’s true, but when I get more evidence I sometimes change my mind. What do you do?

The great muckraker Upton Sinclair had expressed a deep insight into the relationship between the world of ideas and the world of practical men: ‘It is difficult to get a man to understand something, when his salary depends on his not understanding it.’

Investors look at economic fundamentals; traders look at each other; ‘quants’ look at the data. Dealing on the basis of historic price series was once described as technical analysis, or chartism (and there are chartists still). These savants identify visual patterns in charts of price data, often favouring them with arresting names such as ‘head and shoulders’ or ‘double bottoms’. This is pseudo-scientific bunk, the financial equivalent of astrology. But more sophisticated quantitative methods have since proved profitable for some since the 1970s’ creation of derivative markets and the related mathematics. For all that has recently been said about ‘the wisdom of crowds’, the authors prefer to fly with airlines which rely on the services of skilled and experienced pilots, rather than those who entrust the controls to the average opinion of the passengers.

Most decisions are wrong. Most experiments fail. It is tempting to believe that if we entrusted the future of our companies, our industries, our countries, to the right people, they would lead us unerringly to the promised land. Such hopes are always disappointed. Most of Thomas Edison’s inventions did not work, Ford, Morris and Mao ended their careers as sad, even risible figures. Bill Gates missed the significance of the Internet, Mrs Thatcher introduced the poll tax, and Napoleon died in exile on St Helena. Even extraordinarily talented people make big mistakes.

John Maynard Keynes

The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually slaves of some defunct economist.

Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.

The master-economist must possess a rare combination of gifts …. He must be mathematician, historian, statesman, philosopher—in some degree. He must understand symbols and speak in words. He must contemplate the particular, in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must be entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood, as aloof and incorruptible as an artist, yet sometimes as near to earth as a politician.

The political problem of mankind is to combine three things: economic efficiency, social justice and individual liberty.

Markets can remain irrational longer than you can remain solvent.

John Bogle (1929-2019): investment and speculation

the index fund: Don’t look for the needle in the haystack. Just buy the haystack!

Enough: True measures of money, business and life: As I have earlier noted, the most important things in life and in business can’t be measured. The trite bromide ‘If you can measure it, you can manage it’ has been a hindrance in the building a great real-world organization, just as it has been a hindrance in evaluating the real-world economy. It is character, not numbers, that make the world go ‘round. How can we possibly measure the qualities of human existence that give our lives and careers meaning? How about grace, kindness, and integrity? What value do we put on passion, devotion, and trust? How much do cheerfulness, the lilt of a human voice, and a touch of pride add to our lives? Tell me, please, if you can, how to value friendship, cooperation, dedication, and spirit. Categorically, the firm that ignores the intangible qualities that the human beings who are our colleagues bring to their careers will never build a great workforce or a great organization.

Buying funds based purely on their past performance is one of the stupidest things an investor can do.

The most important of these rules is the first one: the eternal law of reversion to the mean (RTM) in the financial markets. [the second time to write it down!]

Today, in our society, in economics, and in finance, we place far too much trust in numbers. Numbers are not reality . At best, they are a pale reflection of reality. At worst, they’re a gross distortion of the truths we seek to measure. But the damage doesn’t stop there. Not only do we rely too heavily on historic economic and market data; our optimistic bias also leads us to misinterpret the data and give them credence that they rarely merit. By worshipping at the altar of numbers and by discounting the immeasurable, we have in effect created a numeric economy that can easily undermine the real one.

why i don’t talk politics with friends

  • Most people don’t have political views, they have political tribes

  • Developing the political reasoning skills to graduate from tribes to views is incredibly difficult

  • Most people don’t want to graduate from tribes to views

being informed is tough

To have an informed view on any given issue, one needs to:

  • understand economics, game theory, philosophy, sales, business, military strategy, geopolitics, sociology, history, and more

  • be able to understand and empathize with the various (and often opposing) groups involved in a topic

  • detect and ignore their own bias (limited experience)

people don’t want to leave the tribe

we are fantastic for finding community and identity.

So people are often faced with two options:

  • A simple world with community, identity, and shared values

  • A messy, complex world that takes more brainpower and alienates most of society

People don’t want research and probabilities, they want a sports team[6] and simple religious code.

The Matrix portrayed it best – when faced with the choice of calming delusion vs harsh reality, most people will choose the former.