Paint, Clothes, and Grass

"If done properly, successful investing entertains as much as watching clothes tumble in the dryer window."

 I just finished reading "The Investor's Manifesto" by William Bernstein.  Those who know me, have heard that my favorite investment book is "The Intelligent Asset Allocator" also by Bernstein because of it's simple way of presenting diversification and the efficient frontier.  But as Bernstein himself states, it was only liked by scientists, engineers, finance professionals.... and may I add statisticians :)   So this newer book tries to reach to a broader audience with humorous quotes, practical advice and tries to impart complex fianncial concepts in simple readable terms. 

Watching clothes tumble, paint dry, and grass grow reflect the need for self control, patience,deferred gratification, and will power in managing money.  "The name of the game is not to get rich, but rather to avoid dying poor".  The problem is we are always fighting our inner investment demons housed inside our chemical reactive brain.  How appropriate that Bernstein was formally a practicing neurologist.

The pair of greedy glowing coals (the Nucleus Accumbens) behind each eye and the "reptilian" Amygdala provide plenty of input to the hippocampi (which encode our memories).  Our cortex, where we consciously calculate and reflect, battles the limbic system (our instincts and emotions). 

The  investment war is continuous ----  buy now ---  or save and buy later?

Bernstein provides the answer -  "It is really true:  The anticipation is better than the pleasure".  "The nuclei accumbens responds nearly identically to the prospect of food, sex, social contact, cocaine, or financial gain."

So the cost is not only the reduction of money (and it's compounded growth rate) but the loss of the anticipation of the pleasure.  This cost is weighed against the pleasure of the present.

Life choices are always a trade-off. 


P.S. - I've always enjoyed my memories of watching clothes dry at the landromat --  but watching paint dry and grass grow is a different story  :)