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How to Bear It

John Lim  |  May 14, 2022

INVESTING MAY BE simple, but it’s far from easy. Our mettle is tested during market extremes, whether it’s bubbles or bear markets. Today, both U.S. and international stocks are close to bear market territory. Amazingly, even major bond market segments are sporting double-digit losses, with Vanguard Total Bond Market ETF (symbol: BND) down almost 10% in 2022.
What makes years like this one so difficult is our deep aversion to losses. Successful investing is about balancing risk and reward.

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Making Good Time

John Goodell  |  Mar 4, 2022

PARKINSON’S LAW states that work expands to fill the time available for its completion. This law is a pervasive reality—and misguided practice—in much of the working world. But I recall first encountering it before I joined the ranks of the employed.
During the summer before my senior year of college, I spent several weeks in Fort Lewis, Washington, for the ROTC training required for a commission in the Army. On the day when it was my turn to lead my peers,

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The Last Taboo

Matt Trogdon  |  Feb 28, 2022

WE ALL HAVE microphones—be it our social media accounts, our podcast or our blog posts. We all have something we want to say, and we want the world to hear it.
Our venting can be shrill and insufferable at times. Who among us hasn’t grown tired of never-ending political arguments and culture wars? Other times our sharing is just inane: If you’ve ever posted a selfie while looking in a bathroom mirror, you’re guilty.

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Check Mate

Michael Flack  |  Feb 17, 2022

WHEN I WAS IN the Navy, the checklist was a way of life. Everything from a radiation leak to starting an air compressor required one. In emergency situations like flooding, you were expected to take memorized “immediate actions,” and then use a checklist to ensure all the actions were accomplished. For more routine procedures, you would follow the checklist line by line—deviations were not allowed.
While this wasn’t conducive to a creative working environment,

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The Sun-Tzu Also Rises

Jim Wasserman  |  Jan 31, 2022

I WAS SURPRISED to realize the other day that, despite the varied topics HumbleDollar has addressed, I couldn’t recall a single mention of Sun-Tzu, the 6th century B.C. military commander who purportedly wrote The Art of War. The book is a favorite read of business schools. Even a cursory search on Amazon shows how often Sun-Tzu and The Art of War are invoked regarding business, finance and investing.

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Expert Guesses

Adam M. Grossman  |  Jan 30, 2022

DOES IT MAKE SENSE to heed the advice of experts? This doesn’t seem like a hard question. I certainly listen to my doctor and to many others with specialized expertise. As a society, we all rely on experts—from civil engineers to airline pilots to firefighters—for our health and safety.
At the same time, however, human judgment seems to be riddled with flaws. Consider these examples:

After reading his senior thesis, Michael Lewis’s advisor at Princeton University gave him this advice: Whatever you do,

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Name That Bias

Greg Spears  |  Jan 6, 2022

THE FOUNDERS of economics were prodigious thinkers. They tended to believe that others shared their brainpower and so would do as they did—wrinkle their brow, think deeply and make the best choices with their scarce resources.
Problem is, this isn’t how most of us operate. Instead, we take mental shortcuts. This is understandable: We’d never rise from the breakfast table to begin our day if we rigorously analyzed the health effects of eggs, orange juice and coffee.

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Sludge vs. Nudge

Greg Spears  |  Nov 5, 2021

IF YOU WANT PEOPLE to do something, make it easy. That’s the big idea behind a nudge, which helps people do the right thing for themselves. It turns out that nudge has an evil twin, called sludge. Sludge makes the right thing harder to do. If you look around, sludge is everywhere.
“If you cannot get financial aid without filling out a twenty-page form, then you have been subjected to sludge,” behavioral economists Richard Thaler and Cass Sunstein write in the new “final” edition of their bestselling book Nudge.

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Going Mental

Jonathan Clements  |  Oct 2, 2021

WE ALL TEND TO VIEW our money as a series of distinct financial buckets. Economists consider such “mental accounting” to be irrational, and perhaps it is. But it’s also mighty useful. Consider some recent articles from HumbleDollar’s writers:

Bill Ehart talked about the separate savings accounts he has for financial emergencies, a new car and his daughter’s wedding. Sure, it would be simpler and perhaps more rational to have a single savings account.

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What’s Your History?

Kenyon Sayler  |  Sep 14, 2021

WE ALL LIVE IN the same economy, but we experience it differently. How we react to today’s economic developments is heavily influenced by our upbringing and world events at that time. This is a key insight from the first chapter of Morgan Housel’s wonderful book The Psychology of Money.
I can think of three things that have shaped my outlook—and lead me to a very different outlook from my children. First,

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Let’s Be Honest

Jim Wasserman  |  Sep 3, 2021

THE GREEN KNIGHT is a new, Arthurian-age fantasy film that was released at the end of July. The crux of the story: The Green Knight offers a challenge at King Arthur’s court. He will allow any knight to take a swing at him with his great axe, as long as that knight agrees to receive a blow a year and a day later. Sir Gawain, one of the youngest of the Round Table,

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Seeing Visions

Jonathan Clements  |  Aug 28, 2021

WE SAVE TOO LITTLE, spend too much and what we buy often disappoints. Is there an antidote for this financially self-destructive behavior? One intriguing possibility: visualization.
If you’re like me, the word itself makes you a little queasy. It conjures up images of both self-absorbed, navel-gazing yuppies (not something I aspire to be) and Olympic athletes getting in the zone (not something I’ll ever be). Still, I think there’s value in spending serious time pondering our financial goals.

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The Good Steward

Joe Kesler  |  Aug 22, 2021

I GOT STUCK IN a conversation at a dinner party recently with a name dropper. It was painful. Wanting to impress me, I suppose, I learned that, “Yes, Janet Yellen and I are good friends. I’ll be traveling to D.C. soon and I’m looking forward to connecting.”
But it didn’t end there. I also heard about this person’s exotic travels and homes around the world. And the fabulous career that supported this lavish lifestyle.

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Flawed Judgment

Greg Spears  |  Aug 13, 2021

ONE FUN FACT I TELL my students about Daniel Kahneman: He won the Nobel Prize for economics without ever taking an economics course in college. Kahneman is a psychologist whose discoveries laid the foundation for the new science of behavioral economics.
One of his most important findings is that loss feels twice as painful to us as gain feels good, so the emotional scales aren’t balanced when we make economic decisions. For instance, workers will wait years to join a 401(k) because contributions can feel like a loss in spending power.

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Choose Both

Don Southworth  |  Jul 14, 2021

IT WAS A WARM MAY night in 1977. I was 19 years old and the manager of a fast-food restaurant. I was also in the middle of a five-year addiction to compulsive gambling that would eventually lead me to the brink of spiritual and financial bankruptcy. It was about 10:30 p.m. and I was cleaning up the store after closing. I was planning on going to the racetrack to catch the last race when I was done.

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