80% of Investors Are Not Trying to Make Money
80% of investors are not really out to make money.
— George Goodman (writing as “Adam Smith”)
Adam Smith was the pen name for Harvard and Oxford-trained George Goodman. As a member of the U.S. Special Forces, goodman had been an expert in psychological warfare. His funny and penetrating insights about Wall Street made him a best-selling author and TV producer.
Usually, we assume that the point of investing is to make money and manage risk, but Goodman felt most investors had other motivations. He arrived at this conclusion in part after interviewing several investors who happened to be the patients of a friend of his who was a psychiatrist.
He found that some investors were purely accidental and only owned stock because they had inherited it. Others invested because their friends and peer groups liked to talk about the market.
Another group was gambling in stocks, hoping for a big, quick payoff. Yet others were just passing time.
While serious investors may indeed be motivated by the prospect of making money, most people are just interested in playing the game, not winning it.
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