Investing Psychology: Finishing Thoughts on Tim Richards' Masterpiece
We’ve spent the last two weeks retelling Tim Richards’ “Investing Psychology” (ISBN: 978-1-118-72219-0). It’s been a bracing, sometimes painful journey through the glitches of the human mind.
As I wrap this up, here are my final closing thoughts on the book and the big lessons I’m taking away.
The Math is Easy, the Psychology is Hard
I’ve worked in IT for over 20 years. I can build models, write code, and analyze data all day. But here’s the thing: none of that matters if I panic when the market drops 20%.
Richards’ book reminded me that we are survival machines, not money-making machines. Our brains want to avoid “snakes” and follow the “herd.” That kept us alive in the jungle, but it will kill your retirement fund.
The Power of the Diary
If there’s one practical change I’m making, it’s the Investment Diary. It’s so easy to trick ourselves into thinking we’re smarter than we are. We “remember” being cautious before a crash when the reality is we were buying at the top.
Writing down your thesis immediately when you buy a stock is the only way to kill the “hindsight bias” monster. It forces you to face your own stupidity, which is the only way to get smarter.
The “Embezzlement” Reality Check
We often treat the financial industry like a helpful partner. Richards calls it for what it is: a machine designed to separate you from your money.
Recognizing that the “game” is rigged over the short term is liberating. It means you can stop playing. You don’t have to watch the news, you don’t have to follow the charts, and you don’t have to listen to the “experts.” You can just buy quality, diversify heavily, and go live your life.
Final Verdict
“Investing Psychology” is essential reading. It doesn’t give you a “magic system” to get rich quick. Instead, it gives you a mirror. It shows you exactly where you’re likely to trip up and gives you the tools to build a safety net.
Money isn’t about being “right” or being “the best.” It’s about security, time, and the freedom to do what matters. Don’t let your ancient brain rob you of that.
Thanks for following along with this series. I hope it helps you stay calm the next time the “volcano god” of the market starts acting up.