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Investing: The Rules of the Road

Investing money can seem a little rudderless at times.

One day you hear that stocks are risky and the next that they’re indispensable. Some days it seems like stocks only go up and sometimes that they only go down. Real estate used to seem like an automatic path to wealth, and then the housing crisis hit. For the uninitiated, it sometimes seems there are no central truths. And unlike certain fields, we all have to deal with money. We can’t “opt out” from financial concerns unless we plan to live in a monastery, and it is useful for all of us to understand the basic ideas.

Investing is not a science but a craft, and a craftsman needs tools. In the case of investing, the tools are mostly mental. If we accumulate a few simple mental tools, we can start evaluating the claims of experts, salesmen, or simply well-intentioned friends.

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