I believe philosophers can be the best investors and that comedians can be the best philosophers. Therefore one may logically deduce that comedians can make the best investors.

Look no further than the philosophy of the late and great George Carlin to prove my point:

Don’t confuse causation with correlation.

“Death is caused by swallowing small amounts of saliva over a long period of time.” ~ George Carlin

If you look hard enough for patterns and correlations, for better or worse, you’ll find them.  However a correlation should not be confused with causation. The winner of the Super Bowl, for example, does not cause a movement in stock prices.

Don’t try to outsmart the investor herd.

“Think of how stupid the average person is, and realize half of them are stupider than that.” ~ George Carlin

This wisdom extends upon the immediately preceding point.  While Mr. Carlin would advise not to confuse causation with correlation, his angle is that many people do confuse them.  There are just enough idiots that believe a Super Bowl win from the old National Football League is positive for the stock market and, as a result, they will buy stocks, hence causing a movement in stock prices.  No matter how much fundamental analysis you do, the psychology (and irrationality) of the herd can make all of your diligent and intellectual analysis useless in an instant.

Try not to live in a hypothetical world.

“What if there were no hypothetical questions?” ~ George Carlin

Most headlines in financial media are posed in the form of a question that no prudent person will spend significant time trying to answer.  Is the Bull Market Over?  Is This a Correction or the Beginning of a New Bear Market?  Should You Buy Gold Now?   Just remember that these questions are designed to get you to read the underlying article and that the media does not exist to provide useful information; it exists to sell advertising.  To accomplish this end, media sources must successfully distract you long enough to read their attractive hypotheticals.

Have a healthy perspective—your own.

“Some people see the glass half full. Others see it half empty.
I see a glass that’s twice as big as it needs to be.” ~ George Carlin

Similarly, and to quote legendary trader Jesse Livermore, “There is only one side to the stock market; and it is not the bull side or the bear side, but the right side.”  Stop arguing your philosophical position with others and place investment trades according to your own position—one that is not easily influenced by preconceived notions or biases.

Don’t take things too seriously.

“People who see life as anything more than pure entertainment are missing the point.” ~ George Carlin

It’s easier (and healthier) to laugh at the idiots in Washington, on Wall Street and in the Federal Reserve than to curse them in the comments section of blogs.  However, if cursing them entertains you, then please proceed to do so…

~~~

This is a guest post from Kent Thune, blog author of The Financial Philosopher.

Category: Philosophy, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

38 Responses to “Investment Advice from George Carlin”

  1. MorticiaA says:

    Outstanding use of pixels today! Thanks for this.

  2. chancypants says:

    “Don’t take things too seriously.”

    That’s good advice for the people of Greece. Just lie back and take it.

  3. Kent Thune says:

    Common Man:

    “When angry, count four; when very angry, swear.” ~ Mark Twain

  4. wunsacon says:

    Excellent, Kent!

  5. rootless says:

    “Think of how stupid the average person is, and realize half of them are stupider than that.”

    This is not necessarily correct.

  6. KeithOK says:

    “There is only one side to the stock market; and it is not the bull side or the bear side, but the right side.”

    No, there is also the “wrong side”. That’s the side that makes being on the right side so lucrative.

  7. Kent Thune says:

    @rootless: Yes, but I don’t think many people would laugh if Mr. Carlin said “Think of how stupid the median person is…”

    @KeithOK: I am sure Mr. Livermore is implying that there is only “one side” for the prudent trader to choose, which is the right side. The point is that biases are self-defeating, meaning that arguing “bull” or “bear” is the wrong side. The other side, the right side, is without bias (or very little bias).

  8. BMF says:

    “The winner of the Super Bowl, for example, does not cause a movement in stock prices.”

    At one point this may have been true, but since people started paying attention to it, the Super Bowl winner does cause the stock market to move, in that an investor acts based the outcome of that event. Typically the “correlation does imply causation” line is referring to instances when a third underlying factor causes both things to happen (e.g., heart disease rates inversely correlated to taking hormone replacement theraphy, but the cause is actually that rich women are more likely to pay for expensive treatments and also to take better care of themselves).

    The real message is to separate real patterns from noise. Before apophenia kicked in, the Super Bowl outcome really didn’t have any impact on stocks.

  9. Vikram says:

    long live Carlin, the real man for the millenium.

    unfortunately, the post just preceding this one asks – “Could it happen here?”

  10. rootless says:

    @Kent Thune:

    Perhaps half of them?

  11. KeithOK says:

    @Kent Thune.
    I’m sure you’re correct, and didn’t intend to imply I know more than Jesse Livermore about trading (or even that I’m at a similar level).

    Just noting that, while the stock market it not a zero-sum game, a large part of what makes the “right side” right is what the “wrong side” does.

  12. brianinla says:

    Just as important, Carlin’s American Dream speech
    http://www.youtube.com/watch?v=acLW1vFO-2Q

  13. WaltFrench says:

    “Think of how stupid the average person is, and realize half of them us are stupider than that.”

    Fixed that for ya. Or “us.”

  14. OK Avenger says:

    Brian: Didn’t really “enjoy” the American Dream” Speech, but thanks for posting it anyway. Wow.

  15. Bruman says:

    Love it!!!

  16. beaufou says:

    “Think of how stupid the average person is, and realize half of them are stupider than that.”

    I love George Carlin but I disagree with this statement.
    The average person is educated to act stupid, and half of them actually believe it.

  17. rashley314 says:

    @Rootless…

    Love your response to the “Median Person” comment…

  18. Kent Thune says:

    @ beaufou: I agree. Your comment reminds of something Michel de Montaigne said:

    “I prefer the company of peasants because they have not been educated sufficiently to reason incorrectly.”

  19. Kent Thune says:

    @ Rootless: Ha! Good point. I suspect at least half, if not more than half, of George Carlin’s audience would laugh if he were to correctly say “median person” instead of “average person.” Perhaps he underestimated the intelligence of his own fans?

    @ KeithOK: I agree. For every “right side” of a trade, there is a “wrong side.” Those who are most often on the right side are likely to be those who are not perma-Bulls or perma-Bears.

  20. @ Kent: there are people who need to hedge… these sometimes provide the necessary counterparty for the ‘right side of the trade’ without being wrong, but cautious / diligent.

  21. gms777 says:

    Steven Wright might be an equally good economic savant….

    How do you tell when you’re out of invisible ink?

    Eagles may soar, but weasels don’t get sucked into jet engines.

    If you think nobody cares about you, try missing a couple of payments.

    The sign said “eight items or less”. So I changed my name to Les.

  22. Robespierre says:

    “A witty saying proves nothing.”

    Voltaire

  23. ben22 says:

    This was a great post, until your last few lines about how it’s easier and healthier just to laugh at the Fed, or the “idiots” in Washington

    total nonsense there

  24. xSiliconValleyEE says:

    Love Carlin’s The American Dream rant posted above!

    I totally disagree with this author’s comment on Carlin’s line of “Don’t take things too seriously”. This author’s comment of “It’s easier (and healthier) to laugh at the idiots in Washington, on Wall Street and in the Federal Reserve than to curse them in the comments section of blogs. However, if cursing them entertains you, then please proceed to do so…”

    This author’s comment on this is a great illustration of taking a quote out of context, it is totally against George Carlin’s whole philosophy and humor. Carlin’s philosophy is that you should be pissed at how bad we’re being screwed over by our government, corporations, and rich bankers. If you don’t believe me on this, please YouTube Carlin’s “The American Dream” rant. His philosophy is not the equivalent of “Don’t be pissed. Don’t worry your pretty little heads on this.” If people are not pissed, nothing is going to change in our broken system.

    BTW, just a technical correction to the article, a Super Bowl win from an old line National Football League team is positive for the stock market, not a win from a team that got it’s start in the 1960′s American Football league ;-)

    Have a great day! :-) :-) :-) :-)

  25. xSiliconValleyEE says:

    Whoops, i wish i could make minor edits to my comments, but the point i made in my previous comment stands. The author’s take of “Don’t take things too seriously” and “It’s easier (and healthier) to laugh at the idiots in Washington, on Wall Street and in the Federal Reserve than to curse them in the comments section of blogs. However, if cursing them entertains you, then please proceed to do so…” on Carlin’s quote of “People who see life as anything more than pure entertainment are missing the point.” is the total opposite of Carlin’s whole philosophy and humor. Sorry bout that.

  26. Kent Thune says:

    @ x SiliconValleyEE:

    Thanks for the note on the Super Bowl theory. Such is the nature of blogs: Heavy on content, light on editing and research. I’ll make the change for correction.

    On Carlin’s philosophy, I believe he would fall under the category of philosophers whose philosophies appear contradictory, which is reminiscent of Walt Whitman’s saying, “Do I contradict myself? Very well then, I contradict myself. I am large, I contain multitudes.”

    I believe Carlin, like most of the great thinkers in history, held what appeared to be contradictory thoughts but they were not really contradictory. On one end, he is angry at the stupidity of the world, including politicians, religious fanatics and environmentalists; on the other end his delivery helped the audience laugh at the truth, no matter how serious the subject matter.

    Entertainment and anger (or one might say passion) appear contradictory but can be one and the same, especially with Carlin.

    I don’t see any evidence of Carlin suggesting that people should hold anger toward anyone without laughing at them at the end of the day.

  27. xSiliconValleyEE says:

    @Mr. Thune

    Cool, i wish i could write a tenth as eloquently as you!

    I agree with you that Carlin’s humor wasn’t that people should hold anger at anyone in specific. But, his philosophy and his humor are that people should be angry at (or passionate about, as you expressed) at how the system of government corporations rich bankers … treats us, with us being the typical person. Or, using Carlin’s words, how the system “screws us”. People may YouTube Carlin’s “American Dream” rant and make their own decision on this subject.

    I just fundamentally disagree with you that people should laugh off what’s so horribly wrong in the system, whose problems are chronicled so excellently by Mr. Ritholtz in this blog. I agree with you that’s it’s not healthy to be consumed by anger over this, one should focus on the positive things in life, life is so beautiful when lived well! But i really equate your philosophy of laughing things off to a divide and conquer strategy by the powers that be who want the system to stay basically the same since they’re doing so well under the current system. If people are not “angry” about it, or passionate about it, nothing will ever change.

    I really respect your writing, it’s just that i fundamentally disagree with you on this issue. Intelligent discussion and disagreement is the nature of blogs, or, at least, it’s the nature of good blogs.

    I write this while smiling, it’s a beautiful day outside! :-) :-) :-)

  28. Kent Thune says:

    @ Barry & Everyone:

    Thanks for the opportunity to write and engage with the greatest knowledge base on the blogoshphere — The Big Picture Readers!

    Opinions, post-edits and differences in philosophy aside, I enjoy the exchange and provocation of thought.

    ” There is no conversation more boring than the one where everybody agrees.” ~ Michel de Montaigne

  29. Takeyourfinger says:

    What do you think this person is? Average? (it’s the jo from florida vid that has gone viral)

    http://www.youtube.com/watch?v=RMK9zxb5HyE

  30. hammerandtong2001 says:

    A trading diddy –

    THE RIGHT SIDE

    It makes no difference
    If you’re short or long.
    What matters only, is…
    If you’re right,
    Or if you’re wrong.

    The investing masterpiece is “Reminiscences of a Stock Operator.” There’s a whole lot about the “right side” covered there.

    And FWIW, I loved Carlin’s gig about big, bad MotherEarth. And how one day she’ll shake all these humans off “like a bad case of fleas.”

    Perspective matters.

    .

  31. Lebowski says:

    We posted a great clip from Carlin and commented on his sage advice a while back: “Good, honest, hard working people continue – and these are people of modest means…continue to elect these rich cocksuckers who don’t give a fuck about them.”

    In fact, in that post we linked back to (and stole from) your great article about the death of the left vs. right paradigm (the real debate is: the individual vs. corporations. You vs. corruption, and you are losing).

    http://bit.ly/ir8xiN

  32. louis says:

    Just take the time to be nice to someone once and a while. You have no idea what they might be dealing with.

    Unless they are a banker with a pen. Then run like hell.

  33. DeDude says:

    @xSiliconValleyEE

    I think humor is an effective way to sustain the anger and prevent it from turning into depression or numbing you into indifference. We all know that the anger will not get much relief for many years (probably decades) because the people behind these outrages are very firmly in power. When people like Colbert, Stewart and Carlin mix humor in with the outrageous facts, they allow us to keep these facts in the front of our mind without going crazy.

    But that is just how it works for me, may not work for everybody.

  34. heywally says:

    Thanks for the George quotes. In my lifetime, he wrote and performed some of the most brilliant comedy ever.

    Unfortunately, one of the last lessons I learned from him is that you don’t want to end up a pissed off, bitter, and unfunny old guy. RIP, Mr. Carlin.

  35. [...] I’m going to join the fray (http://www.ritholtz.com/blog/2011/06/investment-advice-from-george-carlin/) by providing reflections on investing based upon quotes from old fencing manuals. Most of these [...]

  36. PaulJenkins says:

    Man, how I miss Carlin’s simple and beautiful perceptions on life.

    “People who see life as anything more than pure entertainment are missing the point.” ~ George Carlin

    That is absolute gold. People take this whole run after money way too seriously, end up at 50 years of age and they wonder why the hell didn’t they get to enjoy all those years and all that money they saved. They eventually go out and enjoy it, but having fun at 50 isn’t the same as having fun at 25. Live the life, people. Invest like you’ve already lost that money, expect nothing in return. If you do get lucky with some investment, like Yury Mintskovsky did, and somehow become a millionaire over night, donate part of the money, start investing in stuff that really matter, like the up and coming youth that have no local library, or education, or even health care.

    Rest In Peace, George Carlin, may the “Invisible man living in the sky” rest your soul :)