26 - The Friend Stock Market
Imagine a stock market, with every relationship you have in your life as a different stock.
What kind of stock would each be?
- Bonds?: family or family friends that are always there for you, as a dependable asset with returns that will deal well in a crisis
- Blue chips?: long-lasting, extremely stable friendships that have been going for a long time - friends that you can pick up where you left off after a year and it's exactly the same as it was before
- Growth stocks?: new friends, acquaintances, new sparks - volatile with a high potential for a strong growth, but could plunge without warning
- Cyclical stocks?: friends who are there when the good times are rolling, but are gone when the going gets tough
- Penny stocks?: people you vaguely know through friends of friends, or they've been in a group situation for a while but it's too awkward to introduce yourself now because you probably should have done it yonks ago
- Derivatives?: not really sure how this works - options on stocks would be like...planning big events with them in the future that may increase the value of the relationship? i.e. going on a trip, or to a festival? As the time gets closer and your relationship has deepened, it's a more valuable option to execute - if not, it's fine to flake.
- ETFs?: holding...a bunch of stocks together and investing in them as a group. Like maybe with a sports team or something. Okay that works! Good job Vince.
How much investment do you put into each of these stocks? The more effort and time you put into each of these relationships, the more growth and dividends they'll yield over time. Their value grows with each passing year, and that growth compounds. The greater the relationship, the more stable the friendship, and the less you need to worry about that volatility.
How do you choose which stocks to invest in? Spend time finding information about these relationships, these people that you know little about or are just starting to blossom with. Cut your losses when they aren't providing any value, and spend your energy on those with more potential.
Diversify your portfolio? Okay I'm not sure what this means - have a variety of friends? Don't get too comfortable just with blue chip stocks? Keep yourself open to penny and growth stocks? The metaphor breaks down.
My financial knowledge on the stock market ends here. Please educate me if I've said wrong things or you can add to this model!
Chat soon :)
✔️ Real Life Recommendations
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A Random Walk Down Wall Street - I'm sure there are a ton of good financial basics book out there, but this one really helped me understand the wide gamut of different strategies and what different people do on the stock market. It spends a lot of time talking about the efficient market hypothesis - the idea that information is priced into the value of a stock - and how there are 'weak' and 'strong' versions of it. It ends up essentially recommending 'buy ETFs' but I found it very informative!
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Beem It - a beautiful little app built by CBA / NAB / Westpac to really easily send money between people. The UI is splendid and intuitive, allowing you to easily send money to others.
🚌 Adventures on the Information Super-Highway
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Details of the Equifax hack - they used 'admin' and 'admin' as username and password for a portal holding an incredible amount of personal information. Also it was unencrypted. Also it was accessible through public website. Also when it was encrypted, they left the keys on the same public-facing servers. WILD.
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Superforecasters - if you've followed along with these links, you'll know this guy - Cedric from Commoncog - who has done an excellent summary of the book 'Superforecasters'. I absolutely love the prediction competition that was created, and how you could learn to update your forecasts more accurately! Really interesting concept - anyone want to make a bet to forecast something? Brings to mind Long Bets...
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Creativity is a Numbers game - geniuses didn't always create great work - they failed often, but had a bunch of time and space to fail on things so that they could get to the truly innovative concepts and ideas. Maybe we need more space for this in today's society, eh?
🌱 The Calathea Corner
😭 so pretty! Feleafcia's new leaves unfurled and are bright and beautiful! YAY.
