Invest with Daniel Pecaut: Investing in Stocks, Personal Development, Relationships, Meditation and Yourself

After establishing a foundation for how to think about money in the first episode, we go on to lay an foundation for how to think.

In Filters Against Folly, Garrett Hardin's great book, he outlines three filters for making decisions. I found these tremendously helpful in making good investing decisions.

The three filters are: literacy, numeracy and ecolate. 

We discuss geometric progressions.

We discuss how amazing compounding is. Compounding is the eighth wonder of the world. Anybody could be a millionaire if they had enough time and discipline to let money compound.

Lastly, we cover opportunity costs, which relates to maximizing that compounding. We discussed opportunity costs as a way to organize decision making. You determine where you get the most return from your dollar. 

For more information, visit DanielPecaut.com and download his free investing ebook.

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To begin, I stated my mission: to teach and share what I've learned.

The need for this is high in my judgement. 

America is the cradle of capitalism (which is now the world’s primary ideology for economic development). Yet our constituents know so little about it. 

How can it even work when people don't know how it works? Luckily, enough do that is works anyway. But I want everyone to know. 

So the first step in that process to understand is that money is a tool. It's not a conspiracy. It doesn't know you. It doesn't have any feelings. We project a lot of stuff onto it. So pull all that away. It's just a tool.

There’s three things you can do with the tool: you can spend it, give it, or save it. Each has its own level of consciousness. So money trains you over time in different ways.

Then we discussed compounding. We'll discuss that in more depth in the next chapter because it's such an important concept. 

We discussed the rule of 72. You'll recall that if the rate of interest times the number of years equals 72 that's a double. That's a fantastic simplifier to understand significant economic and numeric concepts. 

Then we also discussed the importance of timeframes. So the longer your time horizon is, the more likely owning businesses will work for you. The shorter your timeframe is, the more you should keep it in cash. Because everything outside of cash fluctuates: Whether it be gold, real estate, collectibles, you name it. Everything else fluctuates. 

For more information, visit DanielPecaut.com and download his free investing ebook.

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