Carl Richards

The Behavior Gap

1. IDEA 1

   Behaviour costs investors money

   Richards describes the behavior gap as the difference between what investments return and what investors actually earn. He argues this gap comes mainly from emotional decisions. Investors often earn less than their funds do.

2. IDEA 2

   Simple sketches explain ideas

   Richards uses simple drawings on napkins and index cards to explain financial ideas. He believes that a clear picture often teaches more than complex charts. His sketches became famous online.

3. IDEA 3

   Fear and greed drive mistakes

   Richards explains how people often buy after prices rise and sell after they fall. Following emotions in this way, he argues, leads to buying high and selling low. The pattern repeats in every cycle.

All 8 ideas from The Behavior Gap →