Being wealthy doesn't mean having all the money in the world, just not having to worry about it.

Lesson 12 – Why Bill Gates Isn’t a Million Times Happier than You Are

Wealth has a diminishing marginal utility. This, in my view, is the most important argument, the one I stress with my clients when helping them plan their future. Even if the first two reasons (here and here) didn’t apply, an investment strategy designed to serve real lives mustn’t overlook this one: $2 is not twice Read more »

Lesson 11 – Your Life Is Only One Experiment

To be fair, I must note that a few theorists have offered a plausible case against reversion based on chaos theory, arguing that “off-the-chart” results occur in real life that normal statistics claim are impossible. (For instance, based on the calculated daily volatility of stocks, there is simply no way the U.S. stock market could Read more »

Lesson 10 – The Market Is Not a Pure Coin Flip

In the previous lesson, I promised to provide three reasons to use the median (which improves with diversification) instead of the mean (which does not). I’ll start with my weakest argument, although it is one shared by many academics in the field of finance: Equity returns revert toward long-run averages. The book that first popularized Read more »