You're a Poet, But We Don't Know It

EconTalk Extra
by Amy Willis
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Jason Zweig on Finance and the... Abby Smith Rumsey on Rememberi...

It's easier than ever to be an investor...but is this "democratization" of investing a good thing for all involved? This was among the issues explored in this week's episode, in which EconTalk host Russ Roberts chatted with The Wall Street Journal's "Intelligent Investor" columnist Jason Zweig. As usual, I'd like to suggest a few questions for thought for you...

And this week, we're also offering you a literary challenge...At the very end of the interview, Russ mentions Rudyard Kipling's poem, "If." He challenges Zweig to create a poem of financial advice modeled after Kipling's. Now we're extending the same challenge to you... We'd like to publish some of them on EconTalk, and we've got plenty of Liberty Fund books for those authors selected! So commence poetry-ing, and post yours in the Comments!

kid money.jpg

1. What about the "democratization of finance" and the profusion of information bothers Zweig? Is this an issue you struggle to deal with?

2. Zweig notes the "destructive disintermediation" of sectors of the economy wrought by such companies as Uber. What is happening right now to the financial sector that is similar? Do you think such changes will have big benefits for individuals?

3. Did you ever compete in a stock market simulation as a student? What did you learn from the experience? Why do Russ (and Zweig) think employing such competitions to teach personal finance is a bad idea? Do you agree?

4. Zweig argues that self-control is a key component to successful money management and investing. Do you have a personal story of self-control that you're proud of or one where your self-control was less than perfect and that you'd like to have as a do-over?

5. Don't forget to post that poem!

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COMMENTS (8 to date)
Zach Fechter writes:

The Secret

There's no secret to it all
There's no music in the sky
There's no money on my mind

Oh but love
Now there's the sacred key

And men will run
And men will cry
And men will die

For the love in their eye
For the image of the sky
For the sand on the hill

And there's no freedom in the sea
There's no strength in my knee
There's no youth on the ship

And the waves will crash
And the waves will cry
And the waves will lie

So we savor it all
And we pray for it all
And we run closer still

Toward that sacred key
We run closer still

Ken Simpson writes:

Money is a store of value, they say
A tally of debts one is owed.
Like a karma that's earned by your service to others:
Three duckets per row that is hoed.

Invest it at 6 per centum per annum
In 12 anni hence 'tis worth twice.
Chase the seduction of higher returns,
And find this temptress mayn't play nice.

For this karma is tied to the whimsy of fortune,
And great fortune often brings risk.
Don't be astrayed by the smiles of the winners
Whom by fate of the wheel have been kissed.

For hidden from view are the tears of the others,
The many who lost or were cheated.
They chased the allure, the promise, the riches,
But found the money was gone when 'twas needed.

High risk for the excess, the rest much more safely.
Sleep soundly and dream of great things.
From safe returns time can do magic,
And from paupers often makes kings.

[This was actually the first poem submitted, but it was accidentally submitted to the wrong thread and is now republished here.--Econlib Ed.]

Trent writes:

Investing for your future isn’t exciting,
Not when compared to boxing and bullfighting.
Stocks and bonds and cash and gold,
It’s confusing to know what to hold.
So here’s some advice that I’m highlighting.

One day you’ll be on someone’s payroll,
And you’ll want to grow your bankroll.
Information will bombard you in a flash,
And you’ll be tempted to do something rash.
But the key my child is self control.

Let all “get rich quick” schemes be shunned,
When they fail, you won’t get your refund.
Choose not the latest fads to chase,
Slow and steady growth will win the race.
Open now a Vanguard Index Fund.

Ken Simpson writes:

OK, first stanza:

If the madness of the crowd
brings you last to the game,
If the yearning that haunts you
is finding fortune and fame.
If you find that the glisten
was ne'er more than a bubble.
You'll try again later,
but for now, you're in trouble.

Jeff W writes:

With quantitative
Ease central banks purchase growth.
Alchemists, take note.

---
1) Very surprised Russ didn't give any push back to the idea that information is bad. But I guess that's what the extras are for! This characterization that "democratization of finance" is "bad" really bothered me. Let me do my best to defend it:

Information isn't bad at all! It's not data's fault that people act impulsively. Moreover, democratization of the data allows us to formalize this observation about the individual investor. I can prove to myself that it's much, much better to buy and hold an index fund than to pursue more complex trading strategies.

Furthermore, Zweig noted that firms spend millions of dollars to get the fastest computers and networks to get the best pricing and make the most money. It's now a more efficient market. The barrier to entry has become increasingly higher to take advantage of these arbitrage opportunities, but did we really want so many people and firms dedicated to chasing the money?

2) A little worried that the financial sector is too regulated / "too big to fail" to allow meaningful dismemberment of the intermediaries. For instance, I don't see the "accredited investor" requirement for certain securities going away anytime soon. The Robin Hood app offers free trading of stocks, but this is just enabling impulsiveness.

Bitcoin / the blockchain in developing markets could very useful to individuals.

3) Yes, in middle school. I picked stocks of companies I liked. You raised fair points, but no one took it too seriously. It just illustrated the mechanics of the market.

Michael Brennen writes:

A takeoff on "If":

If you smile and you play
As your gain you assay;
If you try your own route
Your joys to seek out;
If you trade for your pleasure
Giving not without measure:

If terms you read thrice
Where others glance twice;
If you sign off at your call
While others look out for all;
If you leave when good for you
While others see it through:

If your good is your goal
Where others work for the whole;
If your utility you treasure
And its max is your measure;
If you’ll look out for Number One,
You'll be an Economic Man, my Son!

Andrew Beauchamp writes:

Loved the podcast and the challenge....

(With apologies to Rudyard Kipling)

If you save a large part of your earnings
for something you don't yet need;
If you find the lightest jockey
to drive your investment steed;
If you understand your tolerance for risk
and think about allocation;
If you spread your bets among the rest
and know we're not the only nation;
If you keep your head when things go south
and do the same on a bull run;
If you insure your risk and spend a little less
you'll be a great investor my son.

Written by a dad with two young boys.

Ken Simpson writes:

2nd stanza

If you can swim with the sharks
without being eaten alive;
If you can focus on the task
'though the buzz of the hive;
If you can squirrel some today,
Give gratification some delay;
You'll have abundance in the Fall,
And, more, have peace through it all.

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