This Guy Won A Nobel Prize…Here’s What He Has To Say About Investing

Of the nine investing nuggets from Nobel-Prize winning economist, Daniel Kahneman, here were a few that stood out for beginning investors (from Time):

  • An argument for investing in index funds instead of picking individual stocks:  “There is general agreement among researchers that nearly all stock pickers, whether they know it or not – and few of them do – are playing a game of chance.”

  • Turn off CNBC and avoid following daily fluctuations of your investments:  “Closely following daily fluctuations is a losing proposition, because the pain of the frequent small losses exceeds the pleasure of the equally frequent small gains. Once a quarter is enough for individual investors. In addition to improving the emotional quality of life, the deliberate avoidance of exposure to short-term outcomes improves the quality of both decisions and outcomes.”
  • Don’t discount the impact of luck in investing:  “Success = talent + luck; Great Success = a little more talent + a lot of luck.”
  • Beyond $75,000 in earnings, we don’t derive much happiness:  “The satiation level beyond which experienced well-being no longer increases was a household income of about $75,000 in high-cost areas…The average increase of experienced well-being associated with incomes beyond that level was precisely zero.”