Time Preference Rate. “The Marshmallow Tale” by Joachim de Posada and Ellen Singer describes the “Marshmallow Experiment” at Stanford University. The experimenter left the child alone in the room and gave the child a marshmallow, instructing the child to eat it immediately. However, if the child did not eat it within 15 minutes, the experimenter would give the child another marshmallow. Some children waited the full 15 minutes, while others stopped waiting early. These two groups were followed for 14 years, and as a result, the more patient children showed better social and mental abilities. Those who cannot tolerate waiting are said to have a high time preference rate, while those who are patient are described as having a low time preference rate. In investment, high and low time preference ratios are not necessarily good or bad because many investments depend on luck. The key is to find and stick to methods and principles that match one’s own tendencies. - Joseph’s “just my thoughts”
‘Luxury’ has a moral original sin because it is impractical and creates a sense of incongruity between the relatively rich and the poor. Thus, it is true that ‘luxury’ also carries a negative image. However, the rich do purchase luxuries regularly, with a few practical exceptions. This is because luxury items not only incur less depreciation, but their resale value often exceeds the purchase price over time. Think of luxury handbags or jewelry. To preserve or increase wealth, you must have an eye for luxury. This doesn’t mean you should live in luxury; rather, it highlights the challenge of maintaining your accumulated wealth unless you change your habits and attitude toward acquiring assets. - Joseph’s “just my thoughts”