I really thought I’d find this book interesting. Nope.
Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler and Cass R. Sunstein started off with some concepts on decision making that are interesting to me. Then the book went into how to use nudges to improve society. I suppose if I were more interested in making a society a better place and finding that balance between free-market choice and government paternalism, I’d really get into this book. I’m not. I just want to get a higher return on my investment portfolio. 😉
Seriously, if topics such as finding ways to improve governing populations with choices -but not too many choices- then this book would be an excellent read. I consider myself post-political, so I was bored by page 100.
Before I end this review, I will attack the authors for repeating the Baby Boomer Lie, which I covered earlier this week in Investing 101- The Biggest Lesson.
Many investors do not heed this good advice and invest too little of their money in stocks. We believe this qualifies as a mistake, because if the investors are shown the evidence on the risks of stocks and bonds over a long period of time, such as twenty years (the relevant horizon for many investors), they choose to invest nearly all their money in stocks.
Shown the evidence? The authors may know behavioral economics, but they missed the class on historical returns. Let us say my 20 year period started in 2000 or 1964? Ouch. Stocks kind of suck in secular bear markets, don’t they? Glad they didn’t nudge me into making this error.