Just repeating something I said on my most recent podcast with Moe. I think it’s oversimplified to rationalize differences in investing styles with the assumption that people simply have different goals. Two people can have the same goal, like buying a house, and even have similar time horizons, yet arrive at very different investment decisions. Sometimes the difference is simply how they evaluate the risk and expected return of various investment vehicles. One person might think the additional expected return from equities is worth the downside risk. Another might think the possibility of a large drawdown makes that trade-off unattractive. Their goals don’t have to be different. Their assessment of the investment, the risks involved, or how consequential those risks would be can be different. For more, check out our latest episode: https://www.youtube.com/watch?v=YpaMX7abT50&t=2s
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12 Comments
Matt Gray@matt.41 · 21h
Your comments on same goal different strategy always brings me back to another post you made relating to what makes one person comfortable can make another person uncomfortable. The reason I liked that post so much is because it was relevant to both sides of the aisle. One person could have a set it and forget it index based portfolio and sleep well at night. To another person it’d drive them mad not being able to have a hands on approach. They might feel they aren’t in control and like the feeling of swapping stocks, writing options or whatever the case may be. For the first person that’s simply not for them. Each person sets the same end goal, each develops their own strategy to get there and both sleep well at night I think basically summarizes your post.
Max Penders@mjpenders · 21h
I forget who I heard say this, but one of the ideas that has stuck with me is that everyone is a philosopher for tail risk mitigation. Extreme events, by definition, don't happen often enough to be empirically studied, meaning we have to reason about (extreme) tail risk hedging strategies without the benefit of a large sample set
DM @dmomo · 20h
Physics, philosophy and I guess also personal finance. I was given a cool lesson on Chaos Theory when I was pretty young. Strangely enough, it has reminded me to look through the lens of other people's minds and their decision making processes. Things that can seemingly appear on equivalent paths are not.
Brennen Maxwell@mclovinvl · 16h
Interesting, can’t help but think about what is i completely altered my setup what would happen.
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