Discussing the Laws Of Investing, Part 2

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Today’s Question:

Do you truly know why you make the investment decisions you do? Many of them are based on mainstream beliefs but how much do you know about where they are rooted? Are you following these laws of investing (knowingly or not)? This is part two of that discussion.

Confidence Corner

We’d like to think that there’s a lot of independent thought that goes into our investment decisions but most of what we believe is rooted in behaviors that guide our thinking. 

In the last episode of The Financial Answer, we began that discussion by introducing an article titled “The Laws of Investing” by Morgan Housel. In it are 17 laws (which are really more like guidelines or behaviors) that spark some interesting conversation as we consider the implications.

Part two will focus on the laws 3-6, which hit on a few different topics. Time horizon is a key part of this discussion and investors need to make sure their goals align with time. Many times there becomes a mismatch and the result leads to a lack of success.

Risk will be another factor you’ll hear in this episode. How does it relate to luck? And how does risk rise to the forefront when you least expect it? We’ll explain by using a couple of these laws.

While there are 17 total laws defined by Housel, we hope by covering the top two you’ll be more aware of your own investment behaviors. And join us again next week for more!

Listen to the entire episode to hear more about the “Rules of Investing” or click on the segment below to hear a specific portion of it.

[1:14] – “The Laws of Investing” has many topics worth considering based on a number of theories about investing.

[2:15] – Law #3: Career realities create a mismatch between cash flow and time horizon.  

[4:16] – Law #4: People with different time horizons and different goals want different things from the same asset.

[7:16] – Law #5: Luck and risk are the opposite sides of the same coin but we treat them differently.

[11:18] – Law #6: The biggest risk is always whatever no one is talking about.  


A Point Of Wisdom:


Related Content:

Laws of Investing PDF


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