A recent headline read “Study: Preschoolers Better at Figuring out How Gadgets Work than College Students.” At first, it had me scratching my head. But then I figured it out. Preschoolers were more open-minded. They were willing to think unconventionally to solve problems. The Wall Street Journal quoted the research team saying “the best and brightest college students acted as if the machine would always follow the common and obvious rule, even when we showed them how it might work.” That says a lot about human nature. Human beings build barriers to change. The older we get, the more close-minded… Read More
A recent headline read “Study: Preschoolers Better at Figuring out How Gadgets Work than College Students.” At first, it had me scratching my head. But then I figured it out. Preschoolers were more open-minded. They were willing to think unconventionally to solve problems. The Wall Street Journal quoted the research team saying “the best and brightest college students acted as if the machine would always follow the common and obvious rule, even when we showed them how it might work.” That says a lot about human nature. Human beings build barriers to change. The older we get, the more close-minded we become. This provides an important lesson for investing. The common and obvious rule is that buying stocks is a good way to build wealth. And while that’s certainly true to an extent, there’s an unconventional rule that applies more so than ever before in today’s market. But before I get into the details, consider this. In a 2011 survey, securities broker TD Ameritrade found that more than three-quarters of “buy and hold” investors have never bought or sold stock options. The reasons? “Too risky,” according to a third of the respondents. A quarter of them said they “don’t need… Read More