My Sunday Washington Post Business Section column is out. This morning, we look at the very human habit of seeking something for nothing. Its a suckers play that leaves investors vulnerable to sharpies and clever salesmen.
There are numerous examples where pursuing a free lunch (not unlike Alpha) leads to losses.
Here’s an excerpt from the column:
last year, Americans spent more than $70 billion on state-run lotteries. To put that into context, that’s more money than Americans spent on sports tickets, books, video games, movie tickets and music plus all of the apps, games and programs bought from Apple’s iTunes App Store — combined. That is a whole lot of money, poorly spent . . .
The obvious truth is that people who buy a lottery ticket want the free lunch. They want riches and financial security and oodles of discretionary income — and with very little effort. What they do have, to paraphrase New York State’s lottery logo, is “a dollar and a dream.”
And of course, the money shot:
“If you want anything — especially something lots of other people want, too, like money — there is a simple formula that few really want to hear about. It’s no secret. In fact, it’s fairly obvious. All you need to do is work your tail off; be smarter or at least more insightful than your competition; treat every task as an opportunity to enhance your reputation; exercise good judgment; have great patience; be attentive to what matters and what doesn’t; develop social skills; learn what motivates people; avoid getting sidetracked by distractions and nonsense; continue to learn; have valuable, marketable skills; and occasionally, get lucky. Just apply some combination of the above for a few decades, becoming more efficient and productive and luckier as time goes on..”
Obvious, yes, but it needs to be said.
On the hunt for the financial free lunch? Don’t.
Washington Post, October 25, 2015 http://wapo.st/1i1QpW5