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Morgan Housel: Different Kinds Of Stupid

FYI: You can ace the most prestigious grad school and then spend years in prison for insider trading. It’s happened. And the decision to risk everything on a trade that nets you a few percentage points is the kind of thing someone with half the IQ will look at and say, “How stupid are you?”

There are types of smart that have nothing to do with intellect. And there are types of stupid that have nothing to do with unintelligence.

Smart is the ability to solve hard problems, which can be done many ways. Stupid is a tendency to not comprehend easy problems. It’s also is a diversified trait.

A few kinds of stupid prevalent in business and investing:
Regards,
Ted
https://www.collaborativefund.com/blog/different-kinds-of-stupid/

Comments

  • MJG
    edited February 2019
    Hi Guys,

    The only time that I'm the smartest person in the room is when I'm the only person in that room. Even then, I'm not all that smart by any measure. Being smart is a very subjected judgement and is likely to change over time and circumstances. What's smart to someone might well be stupid to someone else.

    It's a complex, interconnected world. What happens somewhere is quickly known everywhere and potentially impacts some of us in unpredictable ways. Investing is even more complex with unknown interactions. These interactions are very volatile and change over time. That makes accurate and repeatable market forecasting an impossible task.

    That's why I don't invest based on predictions. I only invest on what actually has happened. That surely limits my potential gains, but most importantly, it limits my loses. I'll never be at the top of the investment success ranking, but I'll never be at the bottom. I'm satisfied and content with a more modest outcome that that strategy produces. I'm not being especially smart, but I believe I'm not being stupid either. This less aggressive approach has worked for me.

    Best Wishes
  • @MJG: Well, we certainly share that philosophy. Happy to see that you're still with us.

    OJ
  • Hi Old Joe,

    Thanks for your very generous post. I never did abandon this fine site although I probably post less frequently now than in the past. I have less to say these days. I suspect some folks believe I didn't have much to say of interest at any time. That's ok too.

    Best Wishes




  • @MJG hi old friend! I like what you said.

    Like you I am just trying to build up a reasonable portfolio that will probably not going to do the best at any particular time but over time will deliver acceptable results.
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