Financial Security

Recently I’ve been reflecting back to March 2009. My interest in behavioral finance probably stems from the technical confusion with markets. From the collapse of Lehman on, another engineering friend and I traded daily emails attempting to make sense of what was happening. As news continued to worsen, we threw our hands up and proclaimed:

“TOO SCREWY – INCONCLUSIVE!”

Although I anticipated the answer, I needed to find a chart graphing historical events against the stock market. As you would imagine, the more severe the news – the more the market plummeted.

Back to 2009 – equities were at fire-sale prices, yet my urge to grab everything under the sun was relatively low. My wish list grew daily, but my executed orders were close to nill. Simply put, my brain was outputting conflicting messages. How could this be given I knew the Buffet adage, “Be fearful when others are greedy, be greedy when others are fearful”.

Mulling over this relationship, an interesting thought surfaced. Maybe it has less to do with

FEAR & GREED and more to do with

FEAR & EXPECTATIONS.

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After reading an article on a newly-published engineering book, I decided it was finally time to do a post in appreciation of my profession.

The nine-page article focused on Henry Petroski’s newest book

The Essential Engineer: Why Science Alone Will Not Solve Our Global Problems

Dr. Petroski has written over a dozen books on the topic of engineering, and his first,

To Engineer Is Human: The Role of Failure in Successful Design

was also my first introduction to his work.

Earlier today I was reading another book review over at Free From Broke, and was thinking of the similarities drawn between the book’s focus – leadership, and our focus here – personal finance. Much to the same regard, I wanted to highlight excerpts from Dr. Petroski’s article and apply them to personal finance. I’ve gone ahead and highlighted key points in bold.

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Never having seen the show, a co-worker was describing the premise of Pawn Stars. Personally, there’s always been something sketchy about pawn shops since the operations seem like barely legal fences. Anyway, that’s neither here nor there, so back to the show…

Some poor sucker walks in wanting to sell whatever item they’re trying to rid themselves of. First thing the owner asks is what they think the item’s worth. Once the owner knows that number, the game begins.

Apparently the replies range from the colorful to the mundane, but they all convey the same message – “there’s NO way it’s worth THAT!” Even if the owner hasn’t a clue as to the real value, they’ll become temporary experts to close the deal.

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