Are You Taking Enough Aspirational Risk?

Why we need distinct risk buckets: balancing our natural loss aversion with the allure of opportunities that offer the potential for massive upside.Topics covered include:What is modern portfolio theory, and what are some of its flawsWhy so many people have gotten wealthy by being undiversifiedHow to balance personal risk, market risk, and aspirational riskHow prospect theory explains our attraction to positively skewed opportunitiesWhy most people won't get wealthy unless they take some aspirational riskSponsorsNetSuite Delete Me – Use code David20 to get 20% offInsiders Guide Email NewsletterGet our free Investors' Checklist when you sign up for the free Money for the Rest of Us email newsletterOur Premium ProductsAsset CampMoney for the Rest of Us PlusShow NotesPortfolio Selection by Harry Markowitz—The Journal of Finance, Vol. 7, No. 1. (Mar., 1952), pp. 77-91Safety First and the Holding of Assets by A. D. Roy—Econometrica, Vol. 20, No. 3 (Jul., 1952), pp. 431-449The Misbehavior of Markets: A Fractal View of Financial Turbulence by Benoit Mandelbrot and Richard L. Hudson—Hachette Book GroupBeyond Markowitz: A Comprehensive Wealth Allocation Framework for Individual Investors by Ashvin B. Chhabra—The Journal of Wealth Managment, Vol. 7, No. 4, pp 8-34, Spring 2005The Wealth of Households: 2021: Current Population Reports by Briana Sullivan, Donald Hays, and Neil Bennett—Census.govAverage, Median, Top 1%, and all United States Net Worth Percentiles—DQYDJPROSPECT THEORY AND STOCK MARKET ANOMALIES by Nicholas C. Barberis, Lawrence J. Jin, and Baolian Wang—NBER WORKING PAPER SERIESRelated Episodes82: Unlocking the Power of Positive Skewness: Strategies for Investing, Business, and Creativity460: Should You Be Invested 100% in Stocks Before and During Retirement? A Recent Study Says Yes. 421: Beware of Survivorship Bias When InvestingInvesting Rule One: Avoid Ruin229: Stop Maximizing Your Returns Using Modern Portfolio TheorySee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

What this episode covers

Why we need distinct risk buckets: balancing our natural loss aversion with the allure of opportunities that offer the potential for massive upside.Topics covered include:What is modern portfolio theory, and what are some of its flawsWhy so many people have gotten wealthy by being undiversifiedHow to balance personal risk, market risk, and aspirational riskHow prospect theory explains our attraction to positively skewed opportunitiesWhy most people won't get wealthy unless they take some aspirational riskSponsorsNetSuite Delete Me – Use code David20 to get 20% offInsiders Guide Email NewsletterGet our free Investors' Checklist when you sign up for the free Money for the Rest of Us email newsletterOur Premium ProductsAsset CampMoney for the Rest of Us PlusShow NotesPortfolio Selection by Harry Markowitz—The Journal of Finance, Vol. 7, No. 1. (Mar., 1952), pp. 77-91Safety First and the Holding of Assets by A. D. Roy—Econometrica, Vol. 20, No. 3 (Jul., 1952), pp. 431-449The Misbehavior of Markets: A Fractal View of Financial Turbulence by Benoit Mandelbrot and Richard L. Hudson—Hachette Book GroupBeyond Markowitz: A Comprehensive Wealth Allocation Framework for Individual Investors by Ashvin B. Chhabra—The Journal of Wealth Managment, Vol. 7, No. 4, pp 8-34, Spring 2005The Wealth of Households: 2021: Current Population Reports by Briana Sullivan, Donald Hays, and Neil Bennett—Census.govAverage, Median, Top 1%, and all United States Net Worth Percentiles—DQYDJPROSPECT THEORY AND STOCK MARKET ANOMALIES by Nicholas C. Barberis, Lawrence J. Jin, and Baolian Wang—NBER WORKING PAPER SERIESRelated Episodes82: Unlocking the Power of Positive Skewness: Strategies for Investing, Business, and Creativity460: Should You Be Invested 100% in Stocks Before and During Retirement? A Recent Study Says Yes. 421: Beware of Survivorship Bias When InvestingInvesting Rule One: Avoid Ruin229: Stop Maximizing Your Returns Using Modern Portfolio Theory See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.