In this episode of the Sound Financial Bites podcast, Paul Adams and Cory Shepherd discuss how seeing the big picture of the financial industry can strengthen your resolve to persevere through short-term fluctuations and set you on the path to definite financial independence.
Their conversation shares the not-so-secret motivations of financial institutions, debunks the myth of beating the market, and breaks down the world of mutual funds.
What Was Covered
- 2:00-Sound Financial Bites’ free resources
- 2:40 - Four rules in financial institutions
- 3:40 - Secrets of the 401K
- 5:00 - Three main themes from the four rules
- 5:45 - Theme one: Survivorship Bias
- 6:22 - World War II and applied war math
- 10:30 - The lie behind “beating the market”
- 12:40 - Distorted data in mutual funds
- 16:05 - Theme two: The stock-picking game
- 17:40 - Interpreting negative space: The myth of beating the market
- 19:20 - Theme three: The real cost of owning mutual funds
- 22:35 - Locking arms with undisciplined investors
- 24:00 - Nobody is talking about this problem...
- 26:09 - Practical applications
- 26:50 - Trust the market, not the financial institutions
- 29:30 - Standing firm and avoiding risks
- 30:24 - New part of the show: Listener review highlights
“We tend to only look at the survivors in any particular business or economic situation and make our decisions based upon those survivors... therefore not preserving [our] own survival in the most effective way.”
“The market is not beatable. The information happens too fast. Everything revolves so quickly that we can’t predict or trade or get ahead of a market as an individual... not even the highest, wealthiest, best paid hedge-fund managers in the world.”
“The free market is one of the most dependable things that we have in our entire life... What you may not be able to trust are all the institutions that try to stand between you and your participation in a free market.”
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