Weird way to start the week, but work with me here.
You’ll learn a big lesson, I promise.
In fact, you may even end up smarter and impress you friends with this one.
Ready? Let’s go…
Investing Rule #32: Don’t confuse correlation with causation.
One of these days, I’m going to take some time off from my crazy life, set myself up at the beach somewhere, and write a book:
From Rules to Riches: 101 Rules for Investment Success
Do you like the title? Maybe it needs work.
But the basic idea is that the fundamental rules for being a successful investor are mostly, pretty simple.
It’s having the discipline and self-awareness to follow them that’s hard!
Take Rule #32 – don’t confuse correlation with causation.
This comes straight from Statistics 101. It’s not a difficult idea. Just because two things happen at the same time, doesn’t necessarily mean that one causes the other.
For example, studies show that people who floss tend to be thinner than those that don’t. So does flossing make you thin? Of course not. It’s just that more health conscious people tend to watch what they eat, as well as look after their teeth.