Introduction

• The Psychology of Money first chapter deals with the common wisdom that the best person to answer why they do what they do is the same person doing it, and the chapter started by saying that rather than categorizing finance as the same discipline of physics or mathematics that deals with certainty of law, finance is much more broad in scope. It resembles finance to be more of a behavior than science; therefore, rationalization of human action goes beyond the face of what seems obvious.
• Another point that resonates well with me is the illustration that we will be wrong to gauge a janitor with a senator based on their knowledge, but we can adjudge the two of them based on their ability to manage finance. Therefore, money plays an important part in bringing everyone together and not in the view of how much you earn but how best you can manage it without being wrong.

Chapter 1: No One is Crazy

• Your personal experience with money may be 0.00001% of what happened in the world…and you might conclude that this is approximately 80% of what happened in the world based on your perspectives. This section dwells on the importance of experience in the shape of our view about money, inflation, and stocks.
• The theme of the chapter is that nobody is a bad manager of money, but experience dictates it. Thus, if two people can have the same salary or accessibility to funds, but they are indeed shaped by different experiences. Experience of life, environment, and family backgrounds plays an integral part in our shaping decisions about money and financial decisions.
• Experiences lead to considering the same wine bottle from different angles, and the more experienced we are, the better we understand what would have been the cause of the wine taste difference.
• We are all crazy in the scheme of things, because what seems normal might be someone else’s red line, and the more we understand that the concept of forming an opinion goes beyond the regular word of commonality, the better we can appreciate that we are more knowledgeable with experiences than not.

Chapter 2: Luck and Risk

• This chapter focuses on the success story of Bill Gates, and it begins with the fact that he was privileged to have gone to a unique school with only one computer then. The name of the school is Lakeside, and it is on record that this school created the unique opportunity for Microsoft innovations today, and Bill Gates has reportedly said that without Lakesides, there wouldn’t have been a Microsoft today!
• Thereafter, Bill Gates partnered with his good friend on whom they both share a lot of traits. They are extremely smart, and this was evidence when the school commissioned them to build a program for the school routine even when they were still in college.
• Unfortunately, his close friend died while on Mount Everest claiming… and it is on record that it is one in a million probability to have died on the mountain. Equally, it was a one in millions for Bill Gates to have such an amazing opportunity of being in Lakeside with a computer that turned his fortune around.
• Evidence from the above story is that luck and risk were forces that guided human outcomes other than actions.
• Therefore, luck and risk are complex, interconnected and interrelated that you can’t believe in one and not respect the other. This explains why human 100% actions cannot be ascribed to reflect the 100% outcome. There is element of unexplained nature within the outcome. This can be explained through linear reasoning as this:

• This explains the fact that consequential outcomes of actions under your control can be a fractions of the total outcome of what you had achieved.
• This sections summarized that for every Bill Gates who is lucky to have developed a fortune company after his journey at the Lakeside, there is equally another person who had ended their career abruptly without their consent.
• The Economist Nobel price was once asked that “ What do you want to know about Investing that we don’t know already” . He responded that the role of luck in the investment! Deciding on the right investment can be overwhelming despite the classic classification of technicals and fundamental assumptions of guiding. Thus, luck plays a part in the scheme of investment.
• The book takes a deep dive into the different of being considered BOLD and RECKLESS. The path separating the line is most commonly invisible, and someone has to take a caution to know when stepping into out of one into another. It makes reference to Rockefeller business ideology where being knave is being consider as business Smart whereas, it is nothing less than being a common thief.
• The analogy of being bold and reckless can best be explained by action of Mark Zuckerberg turning down Yahoo offers, and the same yahoo is being blamed for turning down Microsoft offer following it refused to allow buy in. This explains that nobody has an explanation or a super guide on differentiate when to take a bold steps in the face of risk and return or when it is being consider as a reckless action.
• The problem of risk, and luck are the biggest challenges we face when we are managing money. The knowledge of risk and luck seems to have make the book conclude that “ Be careful who you praise and admire. Be careful who you look down upon and wish to avoid becoming.”
• Knowing this will save us from concluding that our 100% actions result to our 100% outcomes without the elements of luck in it.
• The best advice for taking this home is to quote this; Some people are born into families that encourage education; others are against it. Some are born into nourishing economies encouraging of entrepreneurship; others are born into war and destitution. I want you to be successful, and I want you to earn it. But realize that not all success is due to hard work, and not all poverty is due to laziness. Keep this in mind when judging people, including yourself.
• The knowledge of this quote is to less focus on individual and case and rather, examine the broad pattern.

CHAPTER 3: Never Enough

The only difference between people is when to say "enough" of anything. This word has the power of differentiating peaceful and war-torn areas because the inability to know at what point to stop can be challenging. It might seem like a trivial concept, but the ability to know when to call it quits remains the challenge of those who have been considered either greedy or satisfied.

To better illustrate the point above, a story of Gupta and Madoff was used as a case study. Gupta was a successful director in one of the leading company, envy of others, and his presence often commands respect, and undoubtedly, he was considered as wealthy but his challenge was self control, and inability to known when to call it enough.

Despite his position in the corporate world, he was accused of insider trading, and subsequently, he was convicted, and sentenced to prison just because of his inability to separate when being consider smart versus being a crook.

The same account explained the case of Madoff who risked everything he had for something he did not need. Warren aptly captured it in his summary: "To make money he didn't have and didn't need, he risked what he did have and did need”. If you risk something that is important to you for something that is unimportant to you, it just doesn't make sense." Madoff's inordinate desire led him into a Ponzi scheme, and he was later arrested and lost everything he once had.

In the view of controlling and to have a sense of belonging when to call it stop, the followings under-listed principles will be of good guide.

• The hardest financial risk is getting the goalpost to stop moving
• Social comparative is an evil that makes man to strive for more. Lesson: never compare yourself with others
• Know the value of enough and when to value it accordingly.
• There are so many things that never worth risking, no matter the outcome.

CHAPTER 4