Last week the economist Richard Thaler won the Nobel Price in Economics for his work that explains that people behave irrationally. Well, duh, right? Anyone who has ever been to a frat party can tell you all about irrational behavior.
When I was a freshman in High School I wanted to invest in the stock market. I, of course, had no idea what that really meant or how to do it, but it seemed interesting to me. My parents, who at the time equated the stock market to something akin to three-card monte in Times Square, told me I could invest when I had saved $1,000 from my paper route. If I had invested my hard-earned $1k into the “stock market” as measured by the S&P 500 then (1979), it would have grown to $77,217 as of the end of this October. And, get this, if I had added just $500 each year to that initial $1,000 investment, the total would now be $400,446. Holy compound earnings, Batman!