One of the more sensitive topics of the day, I continue to research articles about the global warming debate and try to keep an open mind. As a long term planner and one concerned about the environment, this topic is of great interest to me. I recently came across this article by Matt Ridley, an author who has been following the global warming debate for almost 30 years. This long and well researched article reviews the current studies and positions of various organizations on global warming and the impact of increased CO2 levels and whether this is really harmful. If you can make it to the end, he suggests what the cost of debating this global warming issue may really have been to people, our environment and our economy.
Link to article: CLICK HERE
There is one tool constantly discussed and reported on in the financial press that you may be surprised actually doesn’t work all that well when it comes to long term investing It’s called economic forecasting.
John Kenneth Galbraith was a Harvard economist that after years of study concluded, “The only function of economic forecasting is to make astrology look respectable.”
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I just finished reading Richard Thaler’s book called “Misbehaving” which reviews the history and studies done on Behaviourial Economics – how human behaviour (regarding financial decisions) effects the economy. Richard coined a phrase called “myopic loss aversion” which suggests the more we look at our portfolio, the more we are likely to focus on the losses (due to the constant but temporary volatility) the more we see losses, the more we experience loss aversion and the greater the chance we’ll do something typically not best for our long term success. If you are looking at your portfolio more than once a quarter and finding you get upset at what you see, I recommend you read this article from Ben Carlson.