Joe Abbott's Weblog

Letters home to mom

Interesting article

Posted by joeabbott on March 2, 2011

I don’t get finances. Just don’t. I like woodworking, getting outdoors, and dip into programming as pasttimes, but haven’t a clue as to what’s going on in the financial world around me. Part of who I am (or who I’m not). So, while at work, a guy in a meeting used the term “two-pocket gambler” and I shot him a question afterwards asking about it. He in turn sent me a link to an article on behavioral finance titled Why Johnny Can’t Invest. I found it fascinating reading. Just fascinating.

I assumed that when people “got into” finances they were like me: not willing to jump into something that had risks without proper safeguards.

As I said, I like woodworking, climbing, and programming … and so I have push-sticks and blade guards, I have harnesses and ropes, and I have a test machine (so my well-intentioned but incomplete code doesn’t take out my dev box). It’s just what you do when you have risks involved. And, because I don’t “get finances”, I don’t “dabble in the market” on my own; I just don’t feel I have the financial acumen to avoid significant loss.

But the article noted above says that pretty much everyone is clueless, there are many ways for psychology to mess with even the smartest investor, and emotions run deep while people sort out their financial affairs. I don’t think it’ll change anything I do financially, but it tells me that people are more like me (or like I suspect I’d be) than I thought. I’m just less like them in that I won’t jump in.

Fascinating reading.

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