My weekend musings, plus the week’s links.
I have long maintained that it’s perfectly rational to buy a £1 lottery ticket if you want to.
This bemuses friends who know me as a bit of a money maven.
Don’t you realize, they ask, that you’re more likely to be hit by a meteor, while being watched by a bobby who is genuinely on the beat, on a sunny September day in usually ever-grey London?
Well, yes I realize the odds are insanely long. But the potential gain is absolutely ridiculously high, and the cost of playing is just £1.
And the real risk isn’t even the hard-to-quantify one that I will or won’t win, but the near-certain one that I will feel miserable for skipping the £1 ticket when I see the latest millionaire in the paper.
I’m not special in this – it’s what lotteries are founded on. “You’ve got to be in it to win it” the Australians say. It’s hope held hostage over expectation.
It helps that I rarely feel the need to play the lottery. I buy maybe ten tickets a year, and £10 isn’t much to assuage my worry of missing out.
I once worked out that the payout was better than with premium bonds [1], which also helps.
Academic backup
Happily, there’s also academic thinking that backs me up on this, as discussed in the Q&A of this archived TED talk:
It’s all good, but watch the Q&A for the case for playing the lottery.
From the blogs
- The great work debate [2] rolls on – Simple Living in Suffolk [3]
- GDP and consumption – Weakonomics [4]
- In value, risk is not reward – The Psy-Fi blog [5]
- Maybe the ‘new normal’ isn’t that new – Bond Vigilantes [6]
- Bernstein on the permanent portfolio – Efficient Frontier [7]
- Swedroe on juicing active manager’s returns – MoneyWatch [8]
- Buy and hold dead? Really? – Investing Caffeine [9]
- Clever Canadian strategy to reduce dollar averaging costs – Couch Potato [10]
- Yes, you can live on $40,000 a year [Pounds? Easy!] – Len Penzo [11]
- Should you invest or pay off your loans? – The Digerati Life [12]
Mainstream money stories
- The Great Wall: Foreign investment in China – The Economist [13]
- Job title inflation [From June] – The Economist [14]
- Merryn still thinks the market is expensive – FT [15]
- Warning over non-‘bonds’ [told you [16]] – FT [17]
- Investors could claim millions in overseas tax – FT [18]
- Gold hits new peak of $1,283 – Telegraph [19]
- Don’t underestimate income – The Independent [20]
- Plenty of value stocks out there – New York Times [21]
- Rents increasing as first-time buyers frozen out – Guardian [22]
- And finally… evils of cyanide fishing on coral reefs – Guardian [23]
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