Four-Minute Finance Debut

You may have heard that most people put more thought into buying a $1000 refrigerator that into investing their $100,000 retirement account. This may be true. But if it is, I don't think it's because people are reckless. I think it's just that the subject of finance overwhelms them.

Of all the subjects that directly affect our lives, finance, investing, markets and economics are probably the most confusing. We hear that the trade deficit is up, or the dollar is down, but we don't know if those are good or bad. Is it time to buy a house, or time to sell one?  Should I invest my retirement account in stocks or bonds, or get into cash? Why do stocks and bonds go up together, and why do they sometimes go in opposite directions? No wonder most people just throw up their hands and hope for the best.

To make matters worse, even though finance offers a hope of wealth, it is, to most people, boring. Economics has been called "the dismal science." But I don't think these subjects are so much boring as they are just hard to understand. People simply don't know where to begin. In addition, some of the seemingly best financial analysis can just turn out to be flat wrong. And there is so much disagreement. It's easier to predict the weather than the future conditions of economies and markets.

In fairness, prediction is hard. As I'll explain in my next post, the best you can do is go with probabilities. But before you can do that, you have to have some sense of how things actually work. 

Finally, people just don't have a lot of time to devote to learning this subject. They'd rather spend time on things they have some hope of predicting or understanding, like the NBA playoffs or American Idol. So I came up with the idea of writing short blog posts which explain some things about our economic world in quick, readable, and hopefully interesting ways. In doing so, I'll learn more, have some fun writing, and maybe help a few people along the way.