Note: This post first appeared to readers of our free newsletter.

Hi, Rask Newsletter reader.

Humans are always quick to point out just how terrible things can be.

Here are yesterday’s headlines from The Sydney Morning Herald:

“Man trapped down 15 metre pit on Cronulla building site”
“Woman ‘serious’ after alleged road rage attack”
“Kids ‘fed frozen vomit by abusive foster couple'”

Finance is no different.

Here’s yesterday’s Australian Financial Review:

“Citi sees 25pc fall in global shares”
“The risk of another Black Monday

I know. You know. Fear sells.

Pain hurts

Academic studies were done in the 70’s which showed that humans feel the hurt from loss twice as much as the joy of gain. It’s called “loss aversion”.

For example, your boss cuts your salary by 10% and you feel fear, shockhorror, anger and hurt.

But if your boss gives you a 10% raise you might think to yourself, “good, I’m worth it — and it’s only 10%.” 

Naturally, we do everything we can to avoid losing money. As it turns out, however, by selling out of fear, other studies have shown we actually lose more money! 

Damned if you do, damned if you don’t. 

The obvious remedy is to control your emotions or just do nothing when you are acting emotionally. But it’s easier said than done.

“Revealed: Tom Cruise’s Secret For Playing The Same Character in Every Movie”

Another thing humans love is an inside scoop. Hollywood. Gossip. Scandal

Your neighbour’s Google search history.

(okay, maybe I’m the weird one)

We have that in finance, too!

Today, I started reading a book written by an Australian financial market expert. Let’s just say it had the word “secret” and “stock market” in the title.

You see, I was at an investing event in Melbourne. And the book was free. 

I asked someone slumped at the merchandise desk, “what is the book worth?”. I couldn’t help but giggle as she replied, “nothing”.

After I grabbed a few copies I spotted the author in the corner of the room.

I planned to go up and shake this person’s hand and introduce myself.

I’m happy I didn’t.

Because after reading just 20 pages I can tell you the whole thing was a crock. 

The “secrets” this author shared about achieving “financial success” was handed down to them many years ago, while intoxicated (seriously, I’m not making this up — according to the author it actually happened!), by one of the richest people in Europe!

Obviously, being drunk, dropping names and getting tips from a rich dude is important. 

[NOTE: I have excluded the author’s gender and quote in this article (it was included in the newsletter version) because…lawyers cost money…and I don’t want to stoop to the same level]

In summary, this person managed to make themselves look like an unconscionable moron. 

Now, here’s the fun (scary?) part. I’m led to believe said moron has thousands and thousands of Australians following their financial recommendations. 

I don’t know about you, but it seems to me it’s like getting your health advice from TMZThe Kardashians or Women’s Weekly

Kendall Jenner (Kardashian) recently said that painting your wall pink leads to weight loss

It sounds smart and self-conscious (read: vulnerable) young girls loves pink, right?

Unfortunately, vulnerable Aussies actually listen to this intellectual naysaying “expert”. 

Remember: It’s easier to throw rocks at someone else than it is to get hit by them

If you made it through my rant, thank you. In an attempt to prove I’m not the same, here’s some good news…

Take a look at the average Australian household budget below. We put it together from ABS statistics on households and recent wage data. 

How does your budget compare?  

Fortunately, it looks like Aussies are saving money and things aren’t that bad after all.

You’ll never see that on the front page of TMZ! 

(and I won’t get subscribers to my email for saying it)

Until next week, you stay classy

Owen Raszkiewicz

 

P.s. You can sign up for my free weekly email below

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