Book Review; The Behavior Gap

The Behavior Gap; Simple Ways to Stop Doing Dumb Things with Money by Carl Richards

I first heard about Carl Richards on the NPR Planet Money podcast on Nov 18 2011. I was struck by Carl's humility; very few financial advisers would confess to applying for a securities job thinking it was a security job (albeit in 1995) or would admit to losing their house through the housing crisis in the USA.

On the podcast Carl spoke about what he learnt from his mistakes. There was a link on the NPR website to an article Carl had written on the New York Times; How a Financial Pro Lost His House.  His book, The Behavior Gap; Simple Ways to Stop Doing Dumb Things with Money, which was due for release on January 3, 2012, was mentioned at the bottom of that article.

I purchased the book, via Kindle, on the day it was released and read it during the month of January. 

The book is well written. Carl draws from the lessons he has learnt from his mistakes and also from his observations of  his clients and other people's behavior with regard to money matters. Whilst he retains his modest and humble approach his expertise as a financial adviser is very evident. His goal is to help the reader "... make good money decisions." 

There are many awesome diagrams throughout the book, each drawn on a paper napkin, to expound on the point Carl is making. 

Carl highlights the dumb things people do with money e.g. buy high and sell low. He examines our behavioral mistakes and how greed or fear influences us. Carl writes about many issues that should be obvious but with all the mistakes that people make they are obviously not common sense. These include; life is greater than money, we should be modest and accept the things that we do not know and and cannot control e.g what the market will do in the future and our misplaced faith in the advice offered by strangers.

Carl then offers great counsel on simple ways to stop doing dumb things and offers the caution that 'simple is not easy."

I learnt that I am fearful hence risk averse. I tend to wait for the perfect situation before investing which is a dumb thing.

I will be reading this book over and over and applying the advise offered by Carl as I navigate the second half of my life with all the difficult decisions ahead of me.

Ps. I live in Nairobi, Kenya, very far away from Park City, Utah, USA. So the odds of hearing about Carl or connecting with him should be low or next to zero. But with through the following technologies, I was able to do so. I listened to the Planet Money podcast using Pocket Casts app on my Android phone. I purchased the book via Kindle and exchanged two tweets with Carl via Twitter on the Internet.