I love reading about behavioural economics and how human nature limits our ability to make rational decisions. I love it even more when I find myself behaving irrationally despite being aware of it (this is all very meta).
Here are two recent examples:
1) On Sunday I went for a run. In the crazy heat. With my iPhone in my pocket. After two and a half hours in my sweaty pocket, it wouldn't work.
I had turned my $0 run into a $450 run and mentally readied myself to go buy a new phone on Monday.
But then something great happened-the damn thing came back to life (I'm writing this blog post on it right now). I started to feel elated about the $450 I had 'saved' when, in reality, absolutely nothing about my financial situation had changed.
2) I sold a bunch of stocks the other day at a modest return. However, I kept tracking this portfolio just to see how it does. Unfortunately for me, it's been doing great-or at least one stock has. This pains me-even though it's just a shadow portfolio.
Moreover, when the market fell on Monday, I going myself checking to see how much I would have lost, even though I would still theoretically be up. Needless to say, this was getting so unhealthy that I just deleted the portfolio.
I'm quickly realizing that though it's easy to read about this stuff it's going to take a lifetime to master.