The Only 5 Things You Need to Know About Investing
byMay 29th 2013 5:00AM
Should it bother me that there's so much about finance I don't know? I don't think so. As John Reed writes in his book "Succeeding":
Evolution tells you a lot about biology. A handful of cognitive biases explain most of psychology. Likewise, there are a few core principles that explain most of what we need to know about investing.
When you first start to study a field, it seems like you have to memorize a zillion things. You don't. What you need is to identify the core principles -- generally three to twelve of them -- that govern the field. The million things you thought you had to memorize are simply various combinations of the core principles.
Here are five that come to mind.
Motley Fool contributor Morgan Housel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.