Kick Save, and A Beaut!

I don’t watch the NHL these days, but I heard the playoffs are starting.

S&P 500 = +2.99%

Nasdaq = +3.19%

Russell 2000 = +2.83%

Fed Chair Jay Powell delivered the 2nd option of possible alternatives yesterday, which was suggested here on Monday night. To review, these were the three.

Maybe current asset prices (including your house and the cost of cereal) already include the assumption of higher interest rates.

Maybe the Fed has seen the jarring equity market losses, and tones it down, comforting holders of risky assets (including real estate).

Maybe seeing the balance sheet reduction roadmap will surprise investors. If this is the case, interest rates can move by even more than they have (in either direction). Unsurprisingly, this is the singular reaction that I’ll be watching, closely.

It took the second one, when stating that 0.75% rate hike was not currently being discussed. The market breathed a sigh of ‘relief.’

Candidly, I am not certain that is what was actually said, and guess what? It doesn’t matter what I think, Mr. Market understood it that way.

Count Dollars To Avoid Distortions

Only the YTD matters here. Remember that the facts of the prior article started at 17.62 per unit. And on Dec 31, 2021, it was 19.99 per unit.

This shows that the information here is correct, but your takeaway can be wrong. Solution? Count dollars to understand where you are. GH2 Unfiltered is full of this: follow the cash flow, and then assign descriptions, not the other way around.

Most Personal Finance Mysteries Solved

This isn’t Jae’s Pity Party (perhaps that should be the rightful name of this newsletter).

Anyways, financial misunderstanding starts from the very beginning.

People abuse words and language which may look and feel the same, but are very different. Yes, I am aware that money is not the only topic where this exists.

People are fooled by randomness. They have what snotty academic people call “Confirmation Bias.” In other words, “See it worked, I was right” is a logic that people actually use when they don’t fully understand actual principles. When the actual principles appear, the narrative becomes “in the long run…” or “it was random.”

Book #2 will attempt to undo these (good luck to me on that, very uncertain).

Having A PhD In Mandarin Doesn’t Exempt You

If you have PhD in Mandarin, you are insanely smarter than I. That end wouldn’t have crossed my mind.

The point? Even smart people, experts in their field, can discard what they know AND USE EVERYDAY, when it comes to money, because the two bullet points take over.

This poker pro made huge errors, even before starting. And once in it, he corrected it, in the only way he rationally should’ve, when he re-discovered probability, at which he is certainly an expert. He resigned.

He took grief from bystanders, yabit it wasn’t the bystanders’ money, so pfft. The bystanders wanted the spectacle. Understandable, but we didn’t witness the bystanders volunteering their money to keep this showdown going, right?

And if you think that poker is that same as roulette? Well, look at the first bullet point.