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Let compounding work its magic

If you haven’t read Morgan Housel’s Psychology of Money yet, I thoroughly recommend that you do. This book offers a superb examination of human behaviour, neatly packaged into 19 short stories exploring the odd ways we think about money. 

What’s stuck with me most is his assessment of risk. He explains that the right price of an asset for one person might not be the right price for someone else. Thinking that stocks have one rational price is a financial idea which has done “incalculable damage”. 

Certain stocks are flooded with day traders. But the right price of a stock for a trader is entirely different from the right price of a stock for an investor, which is why bubbles occur.

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