The George Costanza Approach to Investing
Accepting we know nothing, is the first step on the path to rational investing
“My life is the opposite of everything I want it to be. Every instinct I have, in every of life, be it something to wear, something to eat… It’s all been wrong.”
— George Costanza
One of the best episodes of Seinfeld is when George realizes that he knows nothing — about anything — and that the easiest way to make better decisions is to do the opposite of what his instincts tell him he should do.
When it comes to investing, a lot of people could make a lot more money if they embraced the fact that they know nothing and, in turn, do nothing.
Next time you feel the urge to time the market or speculate with your investments, ask yourself, What Would Costanza Do? (WWCD) — do the opposite of tinkering with your portfolio; do nothing.
Expectations vs expected returns
A 2014 research paper titled “Expectations of Returns and Expected Returns” provides a compelling look at how investor expectations square up — or, as it turns out, don’t — with forecasts of…
