A Massachusetts woman recently won the biggest lottery prize in US history – $759 million. She did what many lottery winners do and contrary to what most financial planners would advise, which is to quit her job and take the prize as a lump sum of $480 million before taxes, instead of installments over a period of years.
As the US presidential election cycle enters its final days leading up to the election on November 8th, it’s hard to avoid all the “experts” opining on the impact of the elections on the investment markets. Some may wonder if they should somehow change their portfolio in light of election results.
We are surrounded by a cacophony of media and purported “experts” trying to tell us how to make money in the investment markets. It’s human nature to think we can outsmart those around us. The problem is – research shows that following this type of advice is actually detrimental to your long-term investment success.
Recent media related to Michael Lewis’s new book “Flash Boys” and an opinion piece in the New York Times titled “The Hidden Cost of Trading Stocks” might cause the ordinary investor to wonder if they should even bother investing if the playing field is so uneven.
I recently moderated a panel on behavioral finance for the Financial Women of San Francisco. It’s a relatively new field that barely existed when I was in business school in the late 90s. Its basic premise is that people make irrational financial decisions due to their human biases.