The Dumb Money Effect

Carl Richards is a certified financial planner. He writes regularly for the New York Times blog, Bucks, doing an excellent job of making financial principles more understandable via his musings and fabulously illustrated sketches. Yesterday, as I read his latest post, “When Your Money is the Dumb Money,” I couldn’t help but wonder what the equivalent of the dumb money phenomenon is when it comes to how you and I manage our careers. On Wall Street money tends to be categorized in two ways: “smart money” or “dumb money.” The latter is a common sentiment expressed by Wall Street professionals to describe the typical behavior of individual (aka retail) investors. More so than Wall Street professionals (traders, investment bankers, hedge fund managers, portfolio managers, etc.), retail investors typically react to past performance than to anticipated growth. The result: They tend to buy high and sell low; when it is best to buy low, sell high. Every investor is aware of the buy low, sell high investment principle and discipline; yet not every investor follows this practice when it is most warranted. Why? Because they are allowing their emotions to dictate their reaction to the market’s volatility. (Read...

Team Revis & Your Career: Lessons You Can Learn

Admittedly, I am not a football fan. But I, too, will be among the millions tuned into the kick-off of Monday Night Football 2010. It is the season opener for the Baltimore Ravens and NY Jets. And, there’s a lot of hype leading up to this game. As far as I can gather, it is not because each team ended the 2009 season in second place, or because the last time they played each other during the regular season (2007), the Ravens beat the Jets 20-13. No, all eyes – especially those of Jets fans – will be on the Jets’ cornerback, Darrelle Revis. After a 36-day contract holdout, almost every sports columnist has weighed in on the same question: How long will it take Revis (as he is commonly referred to) to get into football shape? After reading several articles and listening to ESPN’s coverage, the question I have is: What does the strategy of “Team Revis” teach us about managing the intersection of work and money? Read...