Investing Is A Double-Edged Sword

We live in the richest of times.

Why do so many feel so poor?

Prosperity doesn’t feel so prosperous despite unprecedented advances in technology, science, medicine, and just about everything else.

Unfortunately, paradox rules our modern world.

The Dalai Lama observed our discontent and laid out his argument for the causes of rampant suffering despite unparalleled material possessions.

We have bigger houses but smaller families;
more conveniences, but less time.

We have more degrees but less sense;
more knowledge but less judgment;
more experts, but more problems;
more medicines but less healthiness.

We’ve been to the moon and back,
but have trouble crossing the street to meet our new neighbor.

We built more computers to hold more copies than ever,
but have less honest communication;
We have become long on quantity,
but short on quality.

These are times of fast foods but slow digestion;
Tall men but short characters;
Steep profits but shallow relationships.

It’s a time when there is much in the window but nothing in the room.

One of the reasons managing money is difficult is competing ideas often lead to contradictory results. A logical mind encounters innumerable minefields when dealing with the psychology of money.

For Example:

The Risk Aversion Paradox: People tend to be risk-averse when losing money, but being too conservative in your investments may lead to insufficient returns to achieve long-term goals. The only sale people hate happens in the Stock Market.

The Paradox of Retirement Savings: It’s imperative to save early for future needs. Young people often rank short-term needs above long-term goals. Time is a difficult concept to understand when you’re young.

The Debt Paradox: Borrowing money can help create wealth when focusing on education and purchasing a home. Uber spending fueled by leverage is a disaster waiting to happen. Understanding how to balance these concepts is like walking on a tightrope.

The Paradox of Insurance: Doling out money for insurance premiums feels like throwing funds into a financial black hole during good times. When tragedy inadvertently strikes, this money becomes a godsend. The concepts of protection and cost are constantly competing against each other. Unfortunately, too many learn the value of insurance the hard way.

The Time Value of Money Paradox: Compounding functions best when started early. Time creates more fortunes than genius. Present-moment spending is very seductive. It’s the biggest threat to significant wealth accumulation. Resistance is often futile without an automated plan to control your primal urges.

The Paradox of Small vs. Large Expenses: We are often told cutting back on daily trips to Starbucks is the holy grail for wealth creation. Slashing small costs signifies nothing if you don’t address major expenses. Many investors fork up double or triple what they should pay regarding their investment fees. This leads to hundreds of thousands of dollars being siphoned from their retirement savings. Depriving yourself of a Frappuccino is needless self-sacrifice if you neglect the goliaths of budget items like housing and transportation costs.

Technology is the new religion. People worship in diverse ways.

Investing in a low-cost, diversified global portfolio is effortless. Paradoxically, it’s never been easier to drain your bank account with impulse online spending.

How you navigate these omnipresent paradoxes in all aspects of life helps distinguish quantity from quality.

Going long on quality and shorting quantity is the optimal portfolio strategy.




This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Please see disclosures here.