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A startup can leverage the insights from "The Psychology of Money" to build wealth by understanding and managing risk, utilizing wealth-building tools that require little technical skill, and overcoming cognitive biases that may hinder financial growth. For instance, the book highlights that successful investments often involve periods of volatility and downturns, as exemplified by Netflix and Monster Beverage. Startups can apply this insight by being patient and resilient in the face of short-term setbacks, focusing on long-term growth. Additionally, startups can benefit from simple, consistent financial practices, such as regular saving and investing, which are powerful tools for wealth accumulation.
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From 2002 to 2018 Netflix returned 35,000%. But the price of success for someone invested in Netflix through that time was high. Netflix traded below its previous all-time high on 94% of days during that period. Monster Beverage, similarly, returned 319,000% from 1995 to 2018, but traded below its previous all-time high on 95% of all days.
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How should investors manage the inevitabilities of risk? What are the most powerful wealth-building tools that require little technical skill? How do...
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