An Economy of Words – Presented by Mark K. Lund, Financial Advisor in Utah

Financial Advisor Utah

On May 16, 2007, economist Thomas Sargent accomplished something remarkable in the history of graduation speeches. He gave an address that, rather than flattering the graduates as is so typical, gave them sound advice. And it was so brief, the entire speech could be printed on a single sheet of paper.1

Sargent’s commencement speech was delivered to graduates of the University of California at Berkeley, where Sargent himself was an alumnus. Recognized for its simplicity, the speech quickly became a favorite among economists and policy experts.

Sargent begins by saying, “I remember how happy I felt when I graduated from Berkeley many years ago. But I thought the graduation speeches were long. I will economize on words.”

He adds that “economics is organized common sense.” And then goes on to list twelve valuable lessons it can teach us about human behavior. Read the complete speech here.

What you notice right away about Sargent’s dozen observations is that most of them don’t mention money at all. They talk about incentives, trade-offs, and unintended consequences.

For example, he addresses our tendency to think that we know what’s best for others. “Other people have more information about their abilities, their efforts, and their preferences than you do.” And “In an equilibrium of a game or an economy, people are satisfied with their choices. That is why it is difficult for well-meaning outsiders to change things for the better or worse.”

He identifies the fundamental reason for government overspending. “Most people want other people to pay for public goods and government transfers (especially transfers to themselves).”

And he explains who will end up holding the bag. “When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation.”

And finally, he explains why it’s nearly impossible to predict what global capital markets will do next. “Because market prices aggregate traders’ information, it is difficult to forecast stock prices and interest rates and exchange rates.”

Sargent, who would win the Nobel Prize in Economics four years after giving this address, reminds us that economics is simply the study of human nature—the choices people make when weighing their incentives and available options. In the same way, our personal financial behavior is simply a part of our life.2

Knowing this is how we behave, it’s important to have strong incentives to reach our goals. We need specific milestones we can look forward to that can help motivate us to stay disciplined and consistently do the prudent thing over the long-term.

If you find you’re lacking the motivation to save for your retirement or investment goals, talk to your trusted financial advisor about setting the kind of concrete goals you can look forward to achieving.

If you ever have any questions about your investments or retirement plans, please feel free to give me a call at 801-545-0696.

Mark Lund
Stonecreek Wealth Advisors, Inc.
11576 S State Street, Bldg. 1002
Draper, UT 84020


Disclosure:This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by Efficient Advisors, LLC (“EA’) for Mark Lund, Mark is a Financial Advisor in Utah. He is known as a Wealth Advisor, The 401k Advisor, Investor Coach, Financial Planner, Investment Advisor and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. a fiduciary, independent, fee-only, Registered Investment Advisor firm providing investment management and retirement planning for individuals and 401k consulting for small businesses. Mark’s newsletter is called The Effective Investor Newsletter. Cities served in Utah are: Salt Lake City, Salt Lake County, Utah County, Park City, Murray City, West Jordan City, Sandy City, Draper City, South Jordan City, Provo City, Orem City, Lehi City, Highland City, Alpine City, American Fork City. The views expressed herein are exclusively those of Efficient Advisors, LLC (‘EA’), and are not meant as investment advice and are subject to change. All charts and graphs are presented for informational and analytical purposes only. No chart or graph is intended to be used as a guide to investing. EA portfolios may contain specific securities that have been mentioned herein. EA makes no claim as to the suitability of these securities. Past performance is not a guarantee of future performance. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. All opinions expressed herein are subject to change without notice. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. You should note that security values may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Investing in any security involves certain systematic risks including, but not limited to, market risk, interest-rate risk, inflation risk, and event risk. These risks are in addition to any unsystematic risks associated with particular investment styles or strategies.

Category: Blog, Newsletters

About the Author ()

Mark K. Lund is the author of The Effective Investor, a #1 Best Seller, and founder of Stonecreek Wealth Advisors, Inc. an independent, fee-only, Registered Investment Advisory firm. He has provided articles for or been quoted in: The Wall Street Journal, The Salt Lake Tribune, The Enterprise Newspaper, The Utah Business Connect Magazine, US News & World Report, and, just to name a few.  Mark publishes two newsletters called, “The Mark Lund Growth Report” and “Mark Lund on Money.”  Mark provides CPE (continuing professional education) courses for CPAs.  You may also have seen him on KUTV Channel 2, or as a guest speaker at a local association or business. Mark provides investment and retirement planning services for individuals and 401(k) consulting for small businesses. In his book, The Effective Investor, Mark exposes the false narrative magazines, media, big Wall Street firms, and most advisors want you to believe. The good news is that Mark will show you that you don’t need their speculative ways of investing in order to be a successful investor. Get a free copy when you schedule your initial consultation.

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