Explaining behavioural finance to a 14-year-old

Explaining behavioural finance to a 14-year-old“Can you explain behavioural finance to my 14-year-old daughter?”

As the girl’s father was a finance professor, I had the impression that he might already have tried it unsuccessfully himself. Undeterred, though, I turned to the unenthusiastic teen and asked her to imagine a prize draw with a £100 reward for the lucky person whose ticket number is randomly drawn from a basket.

There are only 100 tickets,” I explained, “so, arguably, each entry ticket is ‘worth’ £1.” She nodded in agreement. “Now suppose I offer you the chance to buy one of those tickets for 90p. Would you take it?” She nodded again, smiling. Was this going to be easier than she thought? Continue reading

Advertisements

The World Cup needn’t be the only gold they bring home

Despite being an Englishman, former soccer player and manager, Jack Charlton, is immensely popular in the Republic of Ireland. As manager of the national team, he led the soccer-mad nation to its first World Cup competition in 1990. He has been awarded one of the Republic’s highest honours, an honorary Irish citizenship. Cork airport even has a life-sized statue of him indulging his passion for fishing. When he goes on fishing trips to the Republic, he has been known to pay his expenses by cheque. The payees, so delighted to have the autograph of their sporting hero, sometimes never bank them. The value and, therefore, the demand for this asset can be greater than suggested by the face-value because of the signature on it. Continue reading

First Class Honours Bingo

Harvard_University_Academic_Hoods

I had the honour of attending a university graduation ceremony recently. It was a grand affair, full of pomp and tradition. But I have to admit it was little boring. Each one of almost 300 graduates was invited to go up on stage to receive their degree and to shake hands with the Chancellor and other senior members of the teaching staff. Yet, I was only interested in seeing one degree awarded. To pass the time, I decided to play a game of First-Class-Honours Bingo. Continue reading

Looking Forward to Looking Back

“Someday, we’ll look back at this and laugh.”

This expression is reserved for people who, because they are suffering some awful physical or social pain, can find no reason to laugh right now. They have either blundered into made a costly mistake, collided with an avoidable obstacle, or stumbled into a social faux-pas. Yet, they are convinced that in a foreseeable future, their recollection of the moment will allow them a comic interlude. Continue reading