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on 8 September 2017
Read the book and I agree, it is something you need to know. But as sometimes you do them automatically.

You can get confused by so much Pscho analysis, I would say if you know what works for you, stick to it.

And you can gradually add more to it to grow financially. And finally, as the title says, Why smart people make money mistakes I am taking out the word (BIG). As it is taking into assumption that you have money already.

Anyway I like it.
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on 7 April 2017
A very interesting ride along the roller-coaster of behavioural economics and how to sidestep your own inner idiot with practical advice.
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on 29 August 2017
Very good summary of main behavioral economics/finance principles
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on 26 September 2009
Most readable introduction to Behavioural Economics that I have read. I had also read "Nudge" by Richard Thaler and Cass Sunstein before I read this book and I found this more readable and fun with some good takeaways that you could implement in your life and (hopefully) make you take better financial decisions. I would recommend this to anybody with even a passing interest in economics, psychology or even how we make decisions.
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on 10 April 1999
WHY SMART PEOPLE MAKE BIG MONEY MISTAKES is full of examples of decisions you might have to make. You get to choose an option, and then the authors tell you what you should have chosen. This is a great learning technique to bring home the lessons of this superb book. The authors point out several biases that most people have about money (such as it's okay to blow certain money, but not other money -- all money is really the same), themselves (people always overrate their abilities and get taken as a result), and circumstances (even people who got an A in statistics will usually misanalyze the risks they take). Since money is ultimately about math, a lot of your lifetime income and earning potential is lost in the process of following these biases. This book could make or save you a million dollars. You cannot afford not to read it. I was reminded of a parallel book on the same sorts of problems about bad thinking habits as they apply to work situations called "The 2,000 Percent Solution" which you should also read. If you use the lessons of both books, you will be enormously better off financially in your lifetime. It'll be like owning the casino, instead of losing money in it. Good luck!
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on 21 March 1999
I am a "debt elimination specialist" - a financial consultant who teaches people how to pay off their debts and achieve financial independence quickly. Every day, I see smart people who have made big money mistakes, so the title caught my eye. I read the book thinking that it would be useful in helping me to understand my clients better. It did that AND MORE. I was surprised at the self-revelation that I received. At several points, I thought to myself, "These guys must have been reading my mail!" I'll never make any decision (financial or other) in quite the same way as I used to. I highly recommend the book.
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VINE VOICEon 27 May 2004
People don't act like computers when making economic decisions. This book is full of examples that show why people make miseconomic decisions. The basic point is that we have rules of thumb learned in daily life that we apply to economic decisions, and the results are costly.
This book reminds me of Robert Cialdini's excellent book, Influence, that explains the psychological biases that harm us as consumers and how to protect ourselves against unethical sellers. If you read and apply them both, you will have much more prosperity in your life.
Here are some examples: We are all more careful about saving money in some areas than in others. For instance, I'll go to great lengths to save money on air travel, but frequently buy expensive wines in restaurants (not a great value).
Most of us are more concerned about avoiding losses than in making gains. This often translates into holding stocks with losses, rather than selling them, even if there is not much chance of a rebound. I know I'm guilty of this.
Another example is assuming that we have knowledge that we really don't have. Someone who is good in math may not take the time to mathematically evaluate the choices. For instance, a 15 year mortage on your home is only a little more costly per month than a 30 year mortgage. The different in the cost of the total interest you pay is enormous, yet almost everyone gets a 30 year mortgage. Almost everyone has the skill to compare the two choices, but few take the time to do so. This kind of stalled thinking can be irresistible, and your wallet will inevitably be lighter as a result.
When you discover that you have a weakness in one of these areas, you can then be more cautious in avoiding your biases in the future. This book is very helpful in this regard because each chapter explore one bias and begins with a question to test your instincts. In answering that question, you will probably find (if you are like me) that you make the wrong choice.
This book will return its cost in time and money hundreds of times over the rest of your life. Be sure to read and apply it!
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on 20 January 1999
Unlike most books on investing and personal finance, which breathlessly offer the "secrets" of how to get rich quick, this book tells us the honest truth: It doesn't really matter very much which investments you pick unless you know how to control your own fear and greed. The only real key to investment success is self-control! Belsky & Gilovich don't offer a list of "best investments"--and that's a good thing, too, since all those lists are useless anyway. Instead they show how, by understanding and attacking your own limitations, you can combat your own mental shortcomings as an investor. They show us all how we can take simple, sensible steps to get rich slowly--the only way, after all, that it's even possible to get rich. You can learn more by reading this terrific book than you could learn by memorizing 49 wheelbarrows full of all the so-called investment books out there. It's great!
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on 31 August 2010
Although a decent read, there is nothing very new and anyone reading economics/bevavioural finance books recently (freakonomics/Nudge) will have covered most of the issues they write about.
Still its an easy read with some useful reminders - but in need of a 2010 update
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on 28 March 2009
this one is a keeper. I learned from it and shifted my attitude to cash (with the exception of bookbuying). One to pick up again and again and should be part of the school curriculum.
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