Page 22 - Psychology of Money - Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

The economists wrote: “Our findings suggest that individual investors’
willingness to bear risk depends on personal history.”
COBACOBA

Not intelligence, or education, or sophistication. Just the dumb luck of when
and where you were born.

The Financial Times interviewed Bill Gross, the famed bond manager, in
2019. “Gross admits that he would probably not be where he is today if he

had been born a decade earlier or later,” the piece said. Gross’s career
coincided almost perfectly with a generational collapse in interest rates that
gave bond prices a tailwind. That kind of thing doesn’t just affect the
opportunities you come across; it affects what you think about those
opportunities when they’re presented to you. To Gross, bonds were wealth-
generating machines. To his father’s generation, who grew up with and
endured higher inflation, they might be seen as wealth incinerators.

The differences in how people have experienced money are not small, even
among those you might think are pretty similar.

Take stocks. If you were born in 1970, the S&P 500 increased almost 10-
fold, adjusted for inflation, during your teens and 20s. That’s an amazing

return. If you were born in 1950, the market went literally nowhere in your
teens and 20s adjusted for inflation. Two groups of people, separated by
chance of their birth year, go through life with a completely different view
on how the stock market works: