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Speaker 1: Welcome to How to Money. I'm Joel and I'm Matt

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Speaker 1: and today we're talking about behavioral finance with Daniel Crosby. Cheduel.

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Speaker 1: Today we are excited to be sitting down with Dr

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Speaker 1: Daniel Crosby. He is a psychologist and a behavioral finance

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Speaker 1: expert who helps folks understand the intersection of their minds

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Speaker 1: and the market. Daniel is a New York Times bestselling

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Speaker 1: author on behavioral finance, and his latest book, The Behavioral

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Speaker 1: Investor looks at the psychology, physiology, and sociology of financial

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Speaker 1: decision making. That's a lot of bologies, a lot of oologies.

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Speaker 1: He sets forth practical tips as well for making improvements

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Speaker 1: and so when he's not consulting around market psychology, Daniel

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Speaker 1: enjoys exploring the American South, fanatically following St. Louis Cardinals baseball,

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Speaker 1: and spending time with his wife and three children. So, Daniel,

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Speaker 1: thanks for being here, man, Yeah, my pleasure, Thanks for

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Speaker 1: having me. He mentioned the Cards didn't they wamp the

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Speaker 1: Braves a few days ago? Did you watch that game? Well?

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Speaker 1: I was at all of the games, but then the

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Speaker 1: Braves wamped the Cardinals the second too. But there was

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Speaker 1: a streaker at the second one, so it was still

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Speaker 1: worth it. Yeah, that was crazy. He was a non

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Speaker 1: nude streaker who made it all the way from left

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Speaker 1: field to home plate and then got crushed. I want

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Speaker 1: the Braves security. I love the video of that security.

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Speaker 1: People always just hammer them. He crushed him over a

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Speaker 1: half brick while it was incredible. This is my moment. Yeah. Well,

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Speaker 1: and he slipped. He broke his knees like this guy

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Speaker 1: he was coming at him. He juked him, he slipped,

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Speaker 1: then he got back up and laid the tackle on him.

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Speaker 1: So go go Braves security guard. Wow, that's awesome. I

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Speaker 1: think that that might be the most you hear us

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Speaker 1: talking about baseball. We tend to talk about soccer here

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Speaker 1: on the podcast. We're unintentional hipsters, I think, but we're

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Speaker 1: trying not to be great soccer city. Yeah. By the way, Daniel,

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Speaker 1: thanks so much for bringing beer. Daniel brought Land of

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Speaker 1: brewing companies hop Planta for us to have on the

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Speaker 1: show today. So yeah, we really appreciate you bring tasting

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Speaker 1: notes on that one at the end of the show.

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Speaker 1: So the first question we ask anybody that comes on

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Speaker 1: the podcast now, Tamiel is since we do drink a

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Speaker 1: beer on every show. It's something that we splourge on.

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Speaker 1: What it's like the craft beer equivalent in your life.

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Speaker 1: So it's it's cheese. So so my wife and I

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Speaker 1: we we average seven different types of cheese and said

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Speaker 1: at any given time, so we are love cheese. We

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Speaker 1: uh we. Price is no object. We just buy what

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Speaker 1: we want and it's absolutely a blast to to write

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Speaker 1: different types of cheese for us. So that's our thing,

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Speaker 1: it's your splurge. It's also a consumable. What is it

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Speaker 1: about things that we consume that I don't know? We

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Speaker 1: we derive a lot of pleasure from the senses, right,

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Speaker 1: like cheese, I assume what kind of cheese? A do

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Speaker 1: you like? We we like double cheese. No, I don't

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Speaker 1: love this stinky stuff. Our favorite sort of easy go

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Speaker 1: to is the doubling our cheese. We we tried it

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Speaker 1: in Dublin for the first time and it's like got

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Speaker 1: good family memories from a family trip I took there.

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Speaker 1: So yeah, yeah, yeah, not nothing too stinky though. We're

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Speaker 1: that's cool all right. Well we want to ask you too,

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Speaker 1: like why did you decide to get into thinking about money?

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Speaker 1: And you received your doctorate in psychology, but you've turned

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Speaker 1: your focus to kind of investing in and behavioral finances.

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Speaker 1: So like what spurred that on in you? Yeah? So

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Speaker 1: um not wanting to be broke because the easy answers,

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Speaker 1: so the UM. I had two great loves early on

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Speaker 1: in college. One was investment management. I'm the son of

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Speaker 1: a financial advisor, so just grew up in a house

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Speaker 1: where we were always talking about investing in stocks at

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Speaker 1: the dinner table. Uh. So grew up with a real

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Speaker 1: love and a and a real familiarity with with that

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Speaker 1: whole world. But it was also fascinated by human behavior.

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Speaker 1: And so I went through my doctoral program, got about

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Speaker 1: halfway through and had just had enough of being a clinician.

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Speaker 1: You know, I'd met with thousands of clients and I

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Speaker 1: was frankly just stressed out by it, you know, the

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Speaker 1: rigors and just the tough slog of seeing forty fifty

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Speaker 1: people a week who were having a very bad week. Uh.

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Speaker 1: We just beginning to take its toll on me. And

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Speaker 1: so I said, look, I love thinking about human behavior.

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Speaker 1: I love wondering about why people do what they do,

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Speaker 1: But is there a non medical application of this? And

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Speaker 1: so my dad, being who he was I stumbled upon

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Speaker 1: behavioral economics behavioral finance pretty early on. Uh, and it's

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Speaker 1: been a great ride since. Were you board by the

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Speaker 1: financial discussions at the dinner table when you're as a kid? No,

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Speaker 1: I actually loved it. And it was one of those

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Speaker 1: things where, you know, in my in my fifth grade

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Speaker 1: um stock market game simulation, I dominated, right, And so

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Speaker 1: you know, having having my dad helped me out. And

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Speaker 1: I remember investing in the Chicago Tribune and these different stocks,

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Speaker 1: Harley and these different stocks early on and watching it

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Speaker 1: go up and just thinking how amazing it was that

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Speaker 1: I could make money off of other people's work. I

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Speaker 1: mean that was like as a as a young lazy kid,

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Speaker 1: I was like, wow, Like other people are working and

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Speaker 1: I'm getting paid and I'm clipping coupons getting dividends. It

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Speaker 1: was just transformative to me. So I actually quite loved it.

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Speaker 1: So let's talk a little bit about your book, The

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Speaker 1: Behavioral Investor. In that book, like in the first portion

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Speaker 1: of it, you spent a lot of time talking about

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Speaker 1: our bodies and our minds and society as well. Why

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Speaker 1: do you find that that's so important to to focus

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Speaker 1: on in particular when it comes to investing in making

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Speaker 1: those decisions. Yeah, so I I tried to take a

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Speaker 1: big step back with this book because you know, most people,

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Speaker 1: maybe they give some thought to psychology, but they give

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Speaker 1: very very little thought to context. And so one of

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Speaker 1: the things that that I have learned in my study

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Speaker 1: of why we make the decisions that we do is

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Speaker 1: that willpower is very limited and that context matters a

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Speaker 1: great deal. You started off with with talking about the

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Speaker 1: beer that I brought. So I'll give an example from

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Speaker 1: a liquor store that was trying to titrate the the

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Speaker 1: inflows and outflows of the different types of liquor. They

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Speaker 1: found that the type of music they played was the

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Speaker 1: best predictor of what people would buy. So they're trying

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Speaker 1: to manage how much wine or champagne or beer they have.

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Speaker 1: In days that they played German music, that the consumption

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Speaker 1: of beer went up over On days when they played

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Speaker 1: French music, the consumption of champagne went up over seventy percent.

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Speaker 1: But if you ask someone leaving the store, like why

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Speaker 1: did you buy this beer, They're not going to say,

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Speaker 1: you know, I was subtly influenced by environmental cues. So

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Speaker 1: we go through our days and we make all these

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Speaker 1: choices sort of beneath our awareness, and so I wanted

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Speaker 1: to highlight, you know, societally, physiologically, here are some of

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Speaker 1: the things that are impinging on your ability to make

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Speaker 1: good financial choices, because I thought there was sort of

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Speaker 1: a gap in the literature around that. So, yeah, that's

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Speaker 1: a great example. I think that actually helps us see

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Speaker 1: how our brains are susceptible to having things that aren't

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Speaker 1: necessarily self generated to make a decision um. And so

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Speaker 1: when it comes to our brains, why is it that

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Speaker 1: our brains play tricks on us? And why does that

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Speaker 1: make it hard for us to be actually savvy, decent investors.

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Speaker 1: So one of my favorite stats that I that I

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Speaker 1: came across in the book was that your brain accounts

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Speaker 1: for about two to three percent of your body weight,

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Speaker 1: but it accounts for of your metabolic expenditures in a

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Speaker 1: given day. So of the calories that you burn in

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Speaker 1: a day are down to thinking effectively. And so because

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Speaker 1: there's this enormous mismatch, your body is always trying to

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Speaker 1: go into energy saver mode and be more efficient. And

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Speaker 1: of the ways that we do this basically by shutting

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Speaker 1: the brain down, like trying to think less. So we

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Speaker 1: do things like we look at our neighbors and see

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Speaker 1: what they're doing, and we try and do that, or

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Speaker 1: we turn on the TV and see what the financial

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Speaker 1: talking heads are telling us we should do. We draft

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Speaker 1: off of the opinions of others, or we do what

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Speaker 1: we've always done, or we do what our parents do.

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Speaker 1: We're just not equipped to really make well thought out,

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Speaker 1: well reasoned financial decisions again and again and again, because

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Speaker 1: there's this huge mismatch between how hungry our brain is

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Speaker 1: and how big it is. And so that to me

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Speaker 1: is is an incredible Uh, was an incredible thing to learn.

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Speaker 1: You know. The other thing I learned is that we

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Speaker 1: lose thirteen percent of our intelligence of our i Q

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Speaker 1: when we're under financial stress. So even if your brains

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Speaker 1: fully loaded, right, even if your brain is is locked

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Speaker 1: and ready to go with all the right financial education

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Speaker 1: that you need, when when the risk hits the fan,

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Speaker 1: so to speak, you're dumb, Like you you have least

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Speaker 1: access to these things when you need them most. So

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Speaker 1: your brain is not not too well equipped to be

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Speaker 1: a savvy financial decision maker. Yeah, even though you know

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Speaker 1: those facts, you know what you should be doing when Yeah,

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Speaker 1: like when when the stuff hits the fan. Yeah, you

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Speaker 1: are incapable of making the proper decision. One of the

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Speaker 1: other things you mentioned in your book as well was

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Speaker 1: how we're wired for more that immediate gratification and how

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Speaker 1: we have a really tough time thinking beyond that, and

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Speaker 1: that again makes us terrible long term investors, right, yeah,

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Speaker 1: it does. There was a fascinating study in Merrill Lynch

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Speaker 1: actually bought this technology. There was technology that allowed you

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Speaker 1: to age your face so like you could take picture

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Speaker 1: of you and then it would make you look like

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Speaker 1: you were, you know whatever, a hundred years old. Joe

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Speaker 1: loves that app co my co worker literally the other day,

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Speaker 1: took a picture of me. Was like he was like,

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Speaker 1: stand still, I'm gonna take a picture of you and

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Speaker 1: I had no idea what he's doing for and he

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Speaker 1: turned me into a girl. Yeah so yeah, yeah, you

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Speaker 1: still get carded, don't you pretty much? Yeah. So what

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Speaker 1: they found though, is when people were able to envision

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Speaker 1: themselves older, they dramatically up their retirement savings. Because most

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Speaker 1: of us think, you know, we're going to be this

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Speaker 1: age forever and the me that exists today is the

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Speaker 1: me that will always be. But we have to really

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Speaker 1: get a more visceral sense of a of a future

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Speaker 1: self that's gonna want vacations and food and you know,

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Speaker 1: a warm place to sleep just as much as today

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Speaker 1: you does. And that's hard for us to get our

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Speaker 1: minds around, right, And so anything that we can do

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Speaker 1: to kind of get a better picture of that future

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Speaker 1: self is powerful, But it's nothing we do very naturally. Yeah,

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Speaker 1: I think, Yeah, most people in their twenties, and looking

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Speaker 1: back to when I was in my early twenties, it's

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Speaker 1: kind of abnormal interested in this stuff. But most people

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Speaker 1: it's just you think you're invincible, you think you're gonna

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Speaker 1: live forever when you're twenty two, and that's just not

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Speaker 1: the case. And but that's the most important time to

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Speaker 1: start getting invested too, in the stock market, to start

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Speaker 1: thinking about the future. But that's often the time that

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Speaker 1: people are least thinking about the future. Yeah, the world

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Speaker 1: of investing is full of these paradoxes, right, Like, twenty

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Speaker 1: two is exactly when you need to be started building

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Speaker 1: a compounding life financial legacy. And at that point, your

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Speaker 1: prefrontal cortex isn't even fully formed, and you don't even

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Speaker 1: fully grasp a relationship between cause and effect, and I

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Speaker 1: think if we all look back to college, we can

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Speaker 1: we can bring to mind instances where where this was

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Speaker 1: on full display. But yeah, you're you're well positioned to

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Speaker 1: start saving, but not psychologically. So, Daniel, you talked some

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Speaker 1: in the book as well about the primacy and the

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Speaker 1: recency effect. Can you explain that a little bit when

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Speaker 1: it comes to investing. You know, we're talking about age

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Speaker 1: and how certain things affect how we view money and

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Speaker 1: just things in general. How does it affect how we

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Speaker 1: view investing? Yes, So the primus see in recency effect,

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Speaker 1: is this notion in psychology that's backed up by the

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Speaker 1: literature that we have the best memory for things that

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Speaker 1: happened early on and things that have happened recently. And

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Speaker 1: so this is true of even conversations. You go have

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Speaker 1: a conversation with a friend, you're going to have the

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Speaker 1: best memory for sort of the opening gambit and then

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Speaker 1: the last thing that you said before parting. It's also

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Speaker 1: true of our investing live so you know, we look

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Speaker 1: at someone like I'll use myself as an example. So

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Speaker 1: you know, I went to a lot of school, so

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Speaker 1: I didn't really get my first job until I was

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Speaker 1: about twenty seven, and so I get out, get my

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Speaker 1: first job. When I'm twenty seven, I start saving. I

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Speaker 1: got a four oh one K, and then within a

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Speaker 1: year and a half it's the Great Financial Crisis. So

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Speaker 1: you know, you're just getting started. You think you're doing

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Speaker 1: the right thing, and this nice little nest that you've

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Speaker 1: built up is crushed right, it's down, and then you know,

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Speaker 1: bring it to today and we'll go back to Q

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Speaker 1: four of eighteen again, we're down fifteen or so. Someone

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Speaker 1: like me, if they're not careful and if they don't

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Speaker 1: sort of automate good practices, could say, look, the first

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Speaker 1: thing that ever happened to my money was it got

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Speaker 1: you know, when went down a third. Uh. Recently we've

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Speaker 1: had more volatility. Therefore the market is a scary dangerous

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Speaker 1: place forgetting that. You know, there's also been a whatever

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Speaker 1: a four increase in that time as well. So we

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Speaker 1: have to be careful because memory plays tricks on us,

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Speaker 1: and especially I think millennials and others who who have

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Speaker 1: started saving at an inopportune time or a time when

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Speaker 1: they had a traumatic first experiences can be in a

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Speaker 1: little trouble. And you know, the interestingly, the inverse is

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Speaker 1: true too. You see some people who come out and

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Speaker 1: confuse a bull market with a big brain. So they

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Speaker 1: got out in a year. You know, Let's say they

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Speaker 1: started saving in in two thousand and ten, and they're like, wow,

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Speaker 1: this is easy, Like all the stock market does is

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Speaker 1: go up. I'm a genius. And so either success or

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Speaker 1: a failure can actually be problematic, and we have to

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Speaker 1: be careful not to let those early and those recent

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Speaker 1: experiences loom too large. Do you think that that same

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Speaker 1: principle can affect the way that we broadly view money,

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Speaker 1: not just investing. For instance, you sitting around the dining

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Speaker 1: room table with your dad, who's you know, talking to

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Speaker 1: you about stocks? Or for me, you know, I had

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Speaker 1: an experience where my family didn't handle money well and

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Speaker 1: we went through bankruptcy when I was thirteen, And that

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Speaker 1: to me is like the line of demarcation of why

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Speaker 1: I got interested in finances to begin with. How do

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Speaker 1: those effects of primacy and recency affect us in regards

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Speaker 1: to how we think about money in general? Yes, so

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Speaker 1: this is I mean, this is a fascinating question to me.

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Speaker 1: It's certainly the lessons that we learned early take take

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Speaker 1: deep hold. But what's fascinating to me is anecdotally, what

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Speaker 1: I've observed is sort of both sides of this. There

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Speaker 1: are people who grew up in in my situation, say,

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Speaker 1: where you know this talk about money is ever present,

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Speaker 1: and they go, yuck, you know this is too that

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Speaker 1: was too much. You know, that was too much. I

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Speaker 1: don't I don't care about money. And there's people grow

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Speaker 1: up in your situation where there's a bankruptcy or something,

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Speaker 1: and sometimes that's going to lead them to say, I

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Speaker 1: will never let this happen to me. I'm going to

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Speaker 1: educate myself. I'm going to be different, this will never

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Speaker 1: happen to me. And then other times, quite naturally, they

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Speaker 1: perhaps learned the bad lessons that they grew up with.

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Speaker 1: So I wish I knew better what separated people who

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Speaker 1: who run from one style versus those who adopt it.

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Speaker 1: But I have seen in both cases there's always an impact.

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Speaker 1: There's always an impact, but some people run toward it

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Speaker 1: and some people run far away from it. But but

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Speaker 1: either way, I think you're absolutely impacted by those early experiences. Yeah, Daniel,

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Speaker 1: if only we knew the depths of our minds and

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Speaker 1: then why it was that we behave that way, right,

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Speaker 1: So after the break, we're gonna talk more specifically about

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Speaker 1: investing for folks who are not investing at all, things

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Speaker 1: to watch out for, but as well, if you are

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Speaker 1: already investing, we're going to talk about that as well. Alright,

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Speaker 1: we're back from the break. We're speaking with Daniel Crosby,

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Speaker 1: behavioral finance expert. Daniel, I so thoroughly enjoyed your book.

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Speaker 1: I think I geeked out on somebody the studies and

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Speaker 1: the specific stories that you discussed in there. By the way,

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Speaker 1: for our listeners, we're going to give away a few

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Speaker 1: copies of his book at the end of the episodes,

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Speaker 1: so stay tuned for that. But first I want to

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Speaker 1: ask you about a story that you mentioned in your

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Speaker 1: TED talk and then also mentioned in your book, and

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Speaker 1: it was about a woman named Brooke. You were helping

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Speaker 1: her with a specific situation and she seemed to just

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Speaker 1: bury her in the sand about something that was happening

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Speaker 1: in regards to college emissions. Can you tell us a

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Speaker 1: story and then kind of how the how we can

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Speaker 1: learn from that. Yeah, So, Brooke and not not her

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Speaker 1: real name, Brooke was my first ever counseling client, and

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Speaker 1: so to set the stage a little bit. I'm twenty

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Speaker 1: three years old at the time, which I think we

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Speaker 1: can all agree is a great time to be dispensing,

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Speaker 1: you know, life advice to people. Yeah, I've got it

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Speaker 1: figured out. Come and get refer back to the prefuncile cortex.

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Speaker 1: My prefuncial cortex is still half baked at this point.

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Speaker 1: So Brooke foolishly comes to you know, comes to see me.

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Speaker 1: She's literally the first client I've ever seen. And she

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Speaker 1: comes in and she doesn't say a word. She hands

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Speaker 1: me six envelopes, like six six large envelopes, and I'm like,

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Speaker 1: oh my god, like what, you know, what am I

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Speaker 1: in for? This was not in the book? You know,

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Speaker 1: this was what? What chapter was this? Because it's all

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Speaker 1: book learning at this point. And you know, she explains

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Speaker 1: to me that ever since she was a little girl,

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Speaker 1: she's wanted to be a doctor, and she's applied to

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Speaker 1: six medical schools. She's heard back from all all six

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Speaker 1: of them, and she can't bring herself to open the

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Speaker 1: envelopes because she she feels like if she finds out

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Speaker 1: that she didn't get in, she'll be crushed. So, you know,

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Speaker 1: having recently been through the grad school application process myself.

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Speaker 1: If I say to her, like, look, don't you have

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Speaker 1: to let them know that you're that you're coming, Like

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Speaker 1: if you if you did get in, and she goes, yeah,

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Speaker 1: I've got like a week and a half before before

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Speaker 1: i have to you know, have have worked through this

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Speaker 1: open these and have moved on. And so she opened

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Speaker 1: them and she got into all six schools, which really

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Speaker 1: saved my high I mean, that could be a that

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Speaker 1: could have been the end of my therapy career if

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Speaker 1: she had gotten into none of them. But she got

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Speaker 1: into all six schools. But the point that I made

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Speaker 1: to her that that led her to open the envelopes

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Speaker 1: is that sometimes in our efforts to to manage or

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Speaker 1: mitigate risk, we bring about the certainty of the very

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Speaker 1: thing we're scared of. And so in her case, you know,

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Speaker 1: if she had the things she was scared of was

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Speaker 1: not getting into grad school, and her tendency to not

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Speaker 1: want to open these envelopes was going to guarantee the

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Speaker 1: very thing she was scared of. For investors, there's there's

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Speaker 1: an analog here, because the thing that most investors are

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Speaker 1: scared of is not reaching their financial goals, like not

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Speaker 1: crossing the finish line. But the way that they manage

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Speaker 1: that fear is by not investing, by sitting on the sidelines,

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Speaker 1: by staying in cash, by being too conservative. And in

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Speaker 1: a world where your money is being destroyed by inflation

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Speaker 1: at a rate of about three percent a year, choosing

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Speaker 1: not to invest is bringing about the certainty of failure.

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Speaker 1: You're dooming yourself to a diminished quality of life and

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Speaker 1: diminished earning the potential. So that's the analog I'm trying

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Speaker 1: to make their It's like, by not taking risk, you're

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Speaker 1: actually choosing the most risky possible road. That's right. Not

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Speaker 1: risking is the riskiest thing you could ever do. So

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Speaker 1: for those folks, I mean, what do you say to them, Like,

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Speaker 1: to those folks who aren't investing and they do have

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Speaker 1: their head in the sand and they're just trying to

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Speaker 1: avoid making that decision altogether, do you just say invest? Well,

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Speaker 1: So it's interesting, there's a I've used to be really

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Speaker 1: bad at this because I would get frustrated and go, oh,

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Speaker 1: come on, like you, why aren't you doing Why aren't

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Speaker 1: you doing this? Like you know, and you kind of

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Speaker 1: bang your head against that wall. But we as a

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Speaker 1: human family have a profound sort of get lost impulse

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Speaker 1: when someone commands us to do something, you know, we

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Speaker 1: kind of give them the finger, you know, metaphorically when

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Speaker 1: they try and tell us to command us to do

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Speaker 1: something or tell us we're so dumb for not doing something.

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Speaker 1: So what I do now is I listen, you know,

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Speaker 1: I listen and say, you know, what are what are

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Speaker 1: the fears around this? And I try and empathize with

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Speaker 1: those fears, and people once they feel understood, I feel

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Speaker 1: like then they're open to having a conversation about the

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Speaker 1: nuts and bolts of why investing is a good idea.

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Speaker 1: But I find the same thing with diversification because here

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Speaker 1: in Atlanta, I run across all sorts of folks who

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Speaker 1: have eighty percent of their wealth and Coke or ups

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Speaker 1: or a flack or any of the large corporations that

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Speaker 1: are around here, and they're scared to diversify away from

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Speaker 1: these really concentrated positions. And then when you start to listen, though,

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Speaker 1: if you just say, look, you know, it's dumb. All

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Speaker 1: of your eggs are in one basket, they they're not

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Speaker 1: responsive to that. But if you listen and hear things like, look, um,

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Speaker 1: you know this company took a chance on me when

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Speaker 1: I had nothing, and they've made me a millionaire. They've

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Speaker 1: made me who I am today. You can go, okay,

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Speaker 1: you know, you can listen, you can empathize, and you

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Speaker 1: can go, well, it's still dumb, but but but they're

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Speaker 1: in a place to hear that. I think once they've

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Speaker 1: been understood, Yeah, I think. Yeah, dogmatism can be a

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Speaker 1: turn off for so Okay, So, how does your investing

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Speaker 1: timeline influence how we should think about risk when it

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Speaker 1: comes to how we allocate our investments. Yeah, so, I mean,

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Speaker 1: you you definitely want to take less risk as you

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Speaker 1: approach retirement, and you even within that, you want to

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Speaker 1: take less risk with buckets of money that you need

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Speaker 1: in the short term. You know, there's plenty of folks

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Speaker 1: who are young people who are saving for say a

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Speaker 1: down payment on a home or or vehicle or something

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Speaker 1: like that. You don't want to put that money at

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Speaker 1: risk if you're gonna need it in the next two

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Speaker 1: or three years. Because markets have historically returned, you know,

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Speaker 1: returned your investment quite nicely over ten or twelve years.

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Speaker 1: You've you've never had a nominal loss in the stock

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Speaker 1: market over a twelve year period, but over one year

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Speaker 1: or two years, anything can happen, So yeah, you definitely

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Speaker 1: want to take less risk. But we see people starting

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Speaker 1: to change those assumptions now. You know, I have we

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Speaker 1: all have young children here, and I remember when my

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Speaker 1: my two year old was born, the nurses told us,

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Speaker 1: you know, fort pent of the kids that are her

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Speaker 1: age will live to be over a hundred. That's shocking,

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Speaker 1: that's crazy. You know, it's shocking to think that. Let's

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Speaker 1: you know, you go to college until you're twenty two,

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Speaker 1: maybe you go to grad school toil your twenty four

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Speaker 1: twenty five, you work for forty years, and then you've

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Speaker 1: got to live for forty years of what you work for.

430
00:21:04,800 --> 00:21:08,720
Speaker 1: I mean, that's an incredible lift, right, And so historically

431
00:21:08,720 --> 00:21:11,000
Speaker 1: that the idea has been and it remains a good

432
00:21:11,000 --> 00:21:13,960
Speaker 1: idea to take less risk as you age. But we

433
00:21:14,000 --> 00:21:16,720
Speaker 1: find that, you know, people even in retirements still need

434
00:21:16,760 --> 00:21:20,320
Speaker 1: to hold stock because that you're gonna live for thirty

435
00:21:20,400 --> 00:21:23,080
Speaker 1: or forty more years in many cases. Yeah, it goes

436
00:21:23,119 --> 00:21:25,840
Speaker 1: back to that idea that not taking enough risk is

437
00:21:25,880 --> 00:21:28,920
Speaker 1: actually the riskiest thing you can do. Yeah. Yeah, And

438
00:21:28,960 --> 00:21:30,920
Speaker 1: the other thing is too, is with so much information

439
00:21:30,960 --> 00:21:33,240
Speaker 1: at our fingertips, when it comes to research and stocks

440
00:21:33,280 --> 00:21:34,960
Speaker 1: and just all the publications that are out there and

441
00:21:34,960 --> 00:21:37,600
Speaker 1: all the articles. At times there can be such an

442
00:21:37,640 --> 00:21:42,359
Speaker 1: overwhelming flood of information and recommendations as to what we

443
00:21:42,359 --> 00:21:44,760
Speaker 1: should be investing in. How would you recommend to folks

444
00:21:44,920 --> 00:21:47,160
Speaker 1: uh to start approaching that? Like, how do you take

445
00:21:47,200 --> 00:21:49,560
Speaker 1: that first bite? How do you narrow in your focus

446
00:21:49,560 --> 00:21:52,800
Speaker 1: and decide what to actually invest in? So there's there's

447
00:21:52,840 --> 00:21:56,320
Speaker 1: something called the Lynda effect, which shows that the longer

448
00:21:56,400 --> 00:22:00,399
Speaker 1: something's been around, the longer it's likely to be around. Okay,

449
00:22:00,440 --> 00:22:03,840
Speaker 1: So like if we look at today, Um, Kim Kardashian

450
00:22:03,880 --> 00:22:06,199
Speaker 1: has a book of herselfies which is like right at

451
00:22:06,200 --> 00:22:08,520
Speaker 1: the top of the book charts right, and it's been

452
00:22:08,560 --> 00:22:11,280
Speaker 1: there for a year. Um, but I wouldn't bet that

453
00:22:11,320 --> 00:22:13,320
Speaker 1: it will be there in a hundred years. That's just

454
00:22:13,680 --> 00:22:18,560
Speaker 1: my guess. And yet you look at the age to disagree.

455
00:22:18,720 --> 00:22:21,320
Speaker 1: And yet you look at like great philosophical works or

456
00:22:21,320 --> 00:22:23,400
Speaker 1: even you know, books like The Richest Man in Babylon

457
00:22:23,520 --> 00:22:25,960
Speaker 1: or something like this, these sort of classics, it's like

458
00:22:26,000 --> 00:22:29,200
Speaker 1: if they have endured, their likely to endure. And so

459
00:22:29,359 --> 00:22:32,199
Speaker 1: I think that is a sound principle when you're trying

460
00:22:32,200 --> 00:22:36,840
Speaker 1: to understand how to get started with with educating yourself

461
00:22:36,880 --> 00:22:39,919
Speaker 1: about how to invest. There there are a couple of

462
00:22:39,960 --> 00:22:41,920
Speaker 1: really good books that have been around for a really

463
00:22:41,960 --> 00:22:45,639
Speaker 1: long time. They're timeless principles, they're not going anywhere, and

464
00:22:45,680 --> 00:22:48,520
Speaker 1: that is a great place to start. Books over articles,

465
00:22:48,640 --> 00:22:52,480
Speaker 1: long form over short form. I think podcasts like yours

466
00:22:52,480 --> 00:22:56,280
Speaker 1: are another fantastic place to start people who uh don't

467
00:22:56,359 --> 00:22:59,879
Speaker 1: have a reason to steer you wrong because unfortunately, you know,

468
00:23:00,080 --> 00:23:04,320
Speaker 1: so many people are incentivized to to give a brand

469
00:23:04,320 --> 00:23:08,119
Speaker 1: of financial advice that puts money in their pockets, and unfortunately,

470
00:23:08,160 --> 00:23:12,000
Speaker 1: in this country, we we still don't have a system

471
00:23:12,000 --> 00:23:15,520
Speaker 1: where even you know, some financial advisors so called, have

472
00:23:15,680 --> 00:23:17,600
Speaker 1: to act in the best interests of their clients, which

473
00:23:17,640 --> 00:23:20,920
Speaker 1: is sort of an incredible thing to consider. So books

474
00:23:20,960 --> 00:23:23,080
Speaker 1: that have been around a long time are a great

475
00:23:23,119 --> 00:23:25,960
Speaker 1: place to start. And then you know information sources like

476
00:23:26,000 --> 00:23:29,119
Speaker 1: yours that that aren't conflicted and can give you a

477
00:23:29,200 --> 00:23:33,080
Speaker 1: great unbiased starting point. Daniel, can I interest you in

478
00:23:33,119 --> 00:23:36,239
Speaker 1: our life insurance that we're offering. Yes, well, I mean

479
00:23:36,320 --> 00:23:37,760
Speaker 1: hold that note though, do you want to recommend a

480
00:23:37,800 --> 00:23:39,560
Speaker 1: couple books? I mean, you mentioned the richest man in

481
00:23:39,600 --> 00:23:41,879
Speaker 1: Babylon it's a classic. Other a couple other favorites of

482
00:23:41,880 --> 00:23:44,800
Speaker 1: yours that I recommended listeners. I'm going to of course blank.

483
00:23:44,880 --> 00:23:48,119
Speaker 1: So the there's a link called the Nocturn Capital Reading

484
00:23:48,160 --> 00:23:51,159
Speaker 1: List which has some of the best, uh the best

485
00:23:51,200 --> 00:23:53,959
Speaker 1: books that I love that that list of the best books, right,

486
00:23:54,000 --> 00:23:56,639
Speaker 1: So that's a great place to start. I would recommend,

487
00:23:56,680 --> 00:23:59,320
Speaker 1: of course, shamelessly, my book The Laws of Wealth as

488
00:23:59,359 --> 00:24:02,000
Speaker 1: sort of a good to introduction. The Richest Man in

489
00:24:02,040 --> 00:24:06,280
Speaker 1: Babylon Intelligent Investor uh is a is a classic. That's

490
00:24:06,280 --> 00:24:08,960
Speaker 1: the one that sort of got Buffett started that. There's

491
00:24:09,000 --> 00:24:11,679
Speaker 1: many others though, Oh, The Millionaire next Door is another

492
00:24:11,720 --> 00:24:14,880
Speaker 1: wonderful book, classic, another classic. I think you're so right, though.

493
00:24:14,880 --> 00:24:17,280
Speaker 1: We have all this information at our fingertips, but it

494
00:24:17,280 --> 00:24:19,040
Speaker 1: turns out that most of what people are reading is

495
00:24:19,040 --> 00:24:21,240
Speaker 1: stuff that's been written in the last year or two,

496
00:24:21,640 --> 00:24:24,040
Speaker 1: and all these great resources that have proved true over

497
00:24:24,119 --> 00:24:26,320
Speaker 1: time are the ones that we're avoiding. Um And so

498
00:24:26,480 --> 00:24:28,040
Speaker 1: that's to our great shame, really, And so I think

499
00:24:28,080 --> 00:24:30,320
Speaker 1: anybody who's listening to this picking up an older book

500
00:24:30,359 --> 00:24:32,200
Speaker 1: that has to be the test time is a great advice.

501
00:24:32,600 --> 00:24:36,120
Speaker 1: What other big hurdles do you see beginner investors face

502
00:24:36,320 --> 00:24:39,080
Speaker 1: as they're just kind of attempting to dip their toes

503
00:24:39,080 --> 00:24:41,960
Speaker 1: in the water and start. So I think two things.

504
00:24:42,000 --> 00:24:45,040
Speaker 1: I think one is just getting started, right. You know,

505
00:24:45,080 --> 00:24:47,399
Speaker 1: an object in motion tends to stay in motion. And

506
00:24:47,440 --> 00:24:49,960
Speaker 1: the thought can be, you know, I only make whatever,

507
00:24:50,040 --> 00:24:52,840
Speaker 1: I only make X per year, and so it'll be

508
00:24:52,880 --> 00:24:54,479
Speaker 1: a drop in the bucket. It's not going to make

509
00:24:54,520 --> 00:24:59,240
Speaker 1: a difference. And so realizing that inertia cuts both ways,

510
00:24:59,280 --> 00:25:02,119
Speaker 1: that doing nothing can lead you to do more nothing,

511
00:25:02,119 --> 00:25:04,640
Speaker 1: but that even getting started, even in a small way,

512
00:25:05,000 --> 00:25:08,280
Speaker 1: can get you going. And then not knowing where to start,

513
00:25:08,560 --> 00:25:10,960
Speaker 1: you know, not knowing where to start. I read the

514
00:25:11,000 --> 00:25:14,280
Speaker 1: other day that there are now over two hundred and

515
00:25:14,320 --> 00:25:18,800
Speaker 1: fifty thousand different mutual funds. So just doing something like

516
00:25:18,840 --> 00:25:21,560
Speaker 1: a Vanguard Total Index right there, you go start there.

517
00:25:21,760 --> 00:25:25,000
Speaker 1: You know, something that's well diversified, something that's cheap is

518
00:25:25,040 --> 00:25:27,040
Speaker 1: a great place to start and you can figure out

519
00:25:27,040 --> 00:25:29,760
Speaker 1: the rest later. But not knowing where to start, there

520
00:25:29,840 --> 00:25:34,760
Speaker 1: is an overwhelming mountain of complexity. Uh, and you know,

521
00:25:34,880 --> 00:25:37,760
Speaker 1: not much of it is in the investor's favor. So

522
00:25:37,880 --> 00:25:40,240
Speaker 1: just picking a place to start and getting started. But

523
00:25:40,359 --> 00:25:43,840
Speaker 1: I think a a World Index a a total index

524
00:25:43,920 --> 00:25:46,639
Speaker 1: is a great place to start. So that's great advice,

525
00:25:46,720 --> 00:25:49,359
Speaker 1: right for folks who have not yet started investing, for

526
00:25:49,359 --> 00:25:52,320
Speaker 1: folks who are investing but maybe aren't doing the best job. Right,

527
00:25:52,359 --> 00:25:54,640
Speaker 1: That's what we're gonna talk about next. In your book,

528
00:25:54,640 --> 00:25:56,879
Speaker 1: you mentioned how the Mona Lisa it didn't become famous

529
00:25:57,000 --> 00:26:00,000
Speaker 1: until nineteen eleven after it was stolen. Probably my favor

530
00:26:00,000 --> 00:26:01,760
Speaker 1: were story in the whole book, right, I didn't know,

531
00:26:01,840 --> 00:26:03,320
Speaker 1: and then I just got to wow somebody the next

532
00:26:03,400 --> 00:26:05,200
Speaker 1: day about that. It was really cool. It's like, did

533
00:26:05,240 --> 00:26:08,320
Speaker 1: you know, so what does that antidote have to teach

534
00:26:08,400 --> 00:26:11,359
Speaker 1: us when it comes to our own biases? Yes, so

535
00:26:11,760 --> 00:26:14,320
Speaker 1: quickly this story so you can be impressive at cocktail

536
00:26:14,400 --> 00:26:16,919
Speaker 1: parties to the story. The story is, you know, the

537
00:26:16,960 --> 00:26:19,639
Speaker 1: Mona Lisa is the most talked about, the most reproduced

538
00:26:19,680 --> 00:26:22,840
Speaker 1: piece of art around, right, And so we think it

539
00:26:22,960 --> 00:26:26,080
Speaker 1: is that way because it's the best. But really, for

540
00:26:26,119 --> 00:26:28,040
Speaker 1: a long time it was sort of forgotten. It sat

541
00:26:28,119 --> 00:26:30,760
Speaker 1: in this dusty recess of the of the Louver and

542
00:26:30,800 --> 00:26:34,119
Speaker 1: it was only once it was stolen that it became

543
00:26:34,160 --> 00:26:37,679
Speaker 1: sort of an item of national national interest. And you know,

544
00:26:37,680 --> 00:26:39,719
Speaker 1: people are talking about who done it, where did it go?

545
00:26:39,880 --> 00:26:43,040
Speaker 1: Why did why this piece? And what's fascinating it was

546
00:26:43,119 --> 00:26:45,639
Speaker 1: three days before they noticed it was gone. They stole

547
00:26:45,680 --> 00:26:49,159
Speaker 1: the Mona Lisa and no one noticed for three days, right,

548
00:26:49,359 --> 00:26:51,879
Speaker 1: I mean, can you imagine now, like you know sirens

549
00:26:52,000 --> 00:26:55,119
Speaker 1: two seconds later, but three days later, you know, someone

550
00:26:55,160 --> 00:26:57,760
Speaker 1: notices all you know, there's a there's a dusty spot

551
00:26:57,800 --> 00:27:00,679
Speaker 1: on the wall, and and it's missing. And so we

552
00:27:00,800 --> 00:27:04,520
Speaker 1: think the Mona Lisa is is great because we've heard

553
00:27:04,520 --> 00:27:07,800
Speaker 1: of it, but really we having heard of it is

554
00:27:07,840 --> 00:27:10,600
Speaker 1: what made it great. And so the point here is this,

555
00:27:11,040 --> 00:27:14,240
Speaker 1: people tend to overinvest in what they know. Okay, we

556
00:27:14,359 --> 00:27:16,720
Speaker 1: find this a couple of places. One one thing is

557
00:27:16,720 --> 00:27:20,320
Speaker 1: called home bias. Uh. Look at America. The average American

558
00:27:20,400 --> 00:27:22,760
Speaker 1: tends to have about eight five pc of their wealth

559
00:27:22,800 --> 00:27:25,840
Speaker 1: in US stocks, even though US stocks only make up

560
00:27:25,880 --> 00:27:30,120
Speaker 1: about half of the world of the world stage of equities.

561
00:27:30,800 --> 00:27:34,320
Speaker 1: So we want to in general have our asset allocation

562
00:27:34,560 --> 00:27:38,680
Speaker 1: align more or less with the world uh, the world stage,

563
00:27:38,880 --> 00:27:41,640
Speaker 1: so we should be about we're closer to eighty five.

564
00:27:42,080 --> 00:27:44,280
Speaker 1: We even see in various parts of the country in

565
00:27:44,280 --> 00:27:47,800
Speaker 1: the northeast, people tend to be overweight financials. In the Midwest,

566
00:27:47,840 --> 00:27:51,239
Speaker 1: people tend to be overweight agriculture. In Atlanta, people are

567
00:27:51,280 --> 00:27:54,040
Speaker 1: overweight you know, coke and and afflack and things that

568
00:27:54,080 --> 00:27:57,120
Speaker 1: they've heard of. And we think that we're doing ourselves

569
00:27:57,119 --> 00:27:59,919
Speaker 1: a favor by buying what we know because it seems safer.

570
00:28:00,440 --> 00:28:02,600
Speaker 1: This is human nature, like, oh, i've heard of that,

571
00:28:02,720 --> 00:28:05,480
Speaker 1: I know that, so yes, give me some of that.

572
00:28:05,880 --> 00:28:08,639
Speaker 1: And we also over invest in our own company stock,

573
00:28:08,840 --> 00:28:12,040
Speaker 1: even when accounting for, even when controlling for you know,

574
00:28:12,119 --> 00:28:15,320
Speaker 1: employee stock ownership plans and things like that. So you're

575
00:28:15,359 --> 00:28:18,520
Speaker 1: actually loading your risk. You know, let's use Atlanta as

576
00:28:18,520 --> 00:28:21,359
Speaker 1: an example. You're here in Atlanta, you load up on

577
00:28:21,480 --> 00:28:24,000
Speaker 1: coke stock and UPS stock because you want to, you know,

578
00:28:24,119 --> 00:28:28,040
Speaker 1: root for the home team. Well, your home value depends

579
00:28:28,080 --> 00:28:30,840
Speaker 1: on how Coke does and how UPS does. You know,

580
00:28:30,880 --> 00:28:34,159
Speaker 1: your local economy and your ability to stay employed in

581
00:28:34,200 --> 00:28:39,040
Speaker 1: your local economy depends on how these large fortune companies do.

582
00:28:39,560 --> 00:28:42,840
Speaker 1: So when we invest in what we know, we're typically

583
00:28:42,880 --> 00:28:47,120
Speaker 1: triple loading that risk. And also a lot of what's

584
00:28:47,120 --> 00:28:49,880
Speaker 1: in the news is sort of sensational. You think about

585
00:28:49,880 --> 00:28:52,960
Speaker 1: something like cryptocurrency, which has been all over the news lately,

586
00:28:53,320 --> 00:28:55,360
Speaker 1: you know, it feels like you know it because you're

587
00:28:55,400 --> 00:28:59,000
Speaker 1: hearing about it every day, and so it feels safe. Well,

588
00:28:59,160 --> 00:29:02,880
Speaker 1: you know of it, love crypto or hate it. It's volatile,

589
00:29:03,200 --> 00:29:05,360
Speaker 1: and so you know you're you're having heard of it

590
00:29:05,440 --> 00:29:09,840
Speaker 1: doesn't guarantee that it's safe. In fact, it it guarantees

591
00:29:09,880 --> 00:29:11,960
Speaker 1: that it's quite risky. Yeah. I mean in the book

592
00:29:11,960 --> 00:29:14,360
Speaker 1: you mentioned, is it Peter Lynch that had the quote

593
00:29:14,400 --> 00:29:16,680
Speaker 1: of investing what you know and how Yeah, that, in

594
00:29:16,800 --> 00:29:19,520
Speaker 1: fact is pretty terrible advice when it comes to picking

595
00:29:19,600 --> 00:29:22,080
Speaker 1: a stock or or investing in something that you think

596
00:29:22,120 --> 00:29:24,560
Speaker 1: will you know, do well over the long term because

597
00:29:24,640 --> 00:29:26,760
Speaker 1: chances are yeah, like you said, you're just more familiar

598
00:29:26,800 --> 00:29:29,880
Speaker 1: with it, not because it's gonna be awesome. Yeah yeah,

599
00:29:29,960 --> 00:29:31,960
Speaker 1: bye bye. What you know is one of these sort

600
00:29:32,000 --> 00:29:35,760
Speaker 1: of easy Wall Street sayings that it's actually quite dumb. Yeah,

601
00:29:35,800 --> 00:29:38,040
Speaker 1: all right, So what about for experience investors? People have

602
00:29:38,120 --> 00:29:39,920
Speaker 1: been doing in a while. They think they're savvy, they

603
00:29:39,920 --> 00:29:42,160
Speaker 1: have a good strategy, they know what they're doing, but

604
00:29:42,240 --> 00:29:45,040
Speaker 1: often there are mistakes, even for people that have been

605
00:29:45,040 --> 00:29:47,480
Speaker 1: investing for quite a long time. So what what typical

606
00:29:47,480 --> 00:29:51,360
Speaker 1: mistakes do you see a seasoned investor making? So It's

607
00:29:51,400 --> 00:29:54,480
Speaker 1: just like we talked about earlier, how how early success

608
00:29:54,520 --> 00:29:57,680
Speaker 1: can be the hubris that that leads to the downfall.

609
00:29:58,080 --> 00:30:01,480
Speaker 1: I think successful investors can get cocky or they can

610
00:30:01,520 --> 00:30:05,160
Speaker 1: fall prey to this need tom complex complexify. That's not

611
00:30:05,200 --> 00:30:07,840
Speaker 1: a word. We're gonna roll it where. Yeah, we're gonna

612
00:30:07,840 --> 00:30:10,480
Speaker 1: we're making it a word today. They're gonna need to,

613
00:30:10,680 --> 00:30:13,320
Speaker 1: you know, want to make their investments more complex because

614
00:30:13,360 --> 00:30:15,720
Speaker 1: they get bored, right, Like, I'm just holding these you know,

615
00:30:15,760 --> 00:30:17,600
Speaker 1: all you need is a handful of funds if you

616
00:30:17,640 --> 00:30:19,840
Speaker 1: get the right ones, and like, what what am I

617
00:30:19,840 --> 00:30:22,040
Speaker 1: gonna do? Now? How can I put a sexier spin

618
00:30:22,080 --> 00:30:24,400
Speaker 1: on this? And so I think the risk with with

619
00:30:24,440 --> 00:30:28,000
Speaker 1: savvy investors are long term investors is either that they

620
00:30:28,040 --> 00:30:30,920
Speaker 1: get bored with sort of the plane vanilla stuff that

621
00:30:30,960 --> 00:30:34,160
Speaker 1: they're holding and want to go into more esoteric paths,

622
00:30:34,960 --> 00:30:37,800
Speaker 1: or they get cocky. And one of the things that is,

623
00:30:37,880 --> 00:30:39,800
Speaker 1: you know, I talk about sort of these four major

624
00:30:39,880 --> 00:30:42,200
Speaker 1: behavioral errors in the book, and one of the big

625
00:30:42,240 --> 00:30:45,280
Speaker 1: ones is ego. And you have to really, really in

626
00:30:45,280 --> 00:30:49,680
Speaker 1: investing cultivate this beginner's mind, and you have to understand

627
00:30:50,040 --> 00:30:54,680
Speaker 1: that the same uh risk infallibility and foibles that befall

628
00:30:54,840 --> 00:30:57,760
Speaker 1: everyone else. You're just as susceptible to those things is

629
00:30:57,800 --> 00:31:00,240
Speaker 1: the next person. And so thinking that you have it

630
00:31:00,320 --> 00:31:04,680
Speaker 1: figured out is a real risk. And ironically, if you're

631
00:31:04,720 --> 00:31:06,640
Speaker 1: listening to this and you're thinking, well, it's not me,

632
00:31:06,720 --> 00:31:12,400
Speaker 1: I'm I'm humble, I'm cool, you're wrong. Like more this

633
00:31:12,440 --> 00:31:15,360
Speaker 1: it's cool. If you feel implicated in this statement, you're

634
00:31:15,400 --> 00:31:18,160
Speaker 1: probably okay. And if you don't feel implicated, you're in trouble.

635
00:31:18,280 --> 00:31:20,560
Speaker 1: But it's say, you know, investing is full of paradoxes.

636
00:31:20,840 --> 00:31:23,080
Speaker 1: All right, so this is super fascinating stuff. I'm really

637
00:31:23,120 --> 00:31:26,320
Speaker 1: excited to get into kind of some specific questions that

638
00:31:26,480 --> 00:31:29,560
Speaker 1: will I think hone in on how our listeners can

639
00:31:29,600 --> 00:31:32,680
Speaker 1: apply some of these actual behavioral things that happen inside

640
00:31:32,680 --> 00:31:35,480
Speaker 1: of us to specific actions they can take when it

641
00:31:35,480 --> 00:31:37,200
Speaker 1: comes to investing. So we'll get to that with Daniel

642
00:31:37,240 --> 00:31:48,240
Speaker 1: Crosby right after the break. All right, we are back

643
00:31:48,240 --> 00:31:50,560
Speaker 1: from the break. Let's talk now what our listeners need

644
00:31:50,600 --> 00:31:53,080
Speaker 1: to do next. Daniel, we want to specifically talk about

645
00:31:53,200 --> 00:31:56,680
Speaker 1: passive investing. Joel and I. You know, we, along with

646
00:31:56,760 --> 00:31:59,760
Speaker 1: great minds like Warren Buffett, recommend a very basic approach

647
00:31:59,800 --> 00:32:02,440
Speaker 1: to an besting for most folks, in particular folks that

648
00:32:02,480 --> 00:32:06,640
Speaker 1: are just getting started, widely diversified, low cost index funds. Um,

649
00:32:06,720 --> 00:32:08,720
Speaker 1: what would you add to that? What advice would you

650
00:32:08,720 --> 00:32:11,760
Speaker 1: give to folks? So I would say that, you know,

651
00:32:12,400 --> 00:32:16,360
Speaker 1: the active passive debate is one that rages quite ferociously

652
00:32:16,360 --> 00:32:18,720
Speaker 1: in my world. Uh, there are a couple of things

653
00:32:18,800 --> 00:32:21,680
Speaker 1: I think more than how active or how passive a

654
00:32:21,760 --> 00:32:24,040
Speaker 1: vehicle is that I think you need to keep in mind. Okay,

655
00:32:24,080 --> 00:32:27,800
Speaker 1: So one is rules based. So part of why passive

656
00:32:27,920 --> 00:32:30,840
Speaker 1: has one over long periods of time is just that

657
00:32:30,880 --> 00:32:34,560
Speaker 1: it's systematic. And you find even among the best active managers,

658
00:32:34,600 --> 00:32:37,440
Speaker 1: you know, folks like Jim Simons at Renaissance Technology, who

659
00:32:37,480 --> 00:32:42,240
Speaker 1: has had you know, absolutely eye popping technologies and returns. Rather,

660
00:32:42,360 --> 00:32:44,280
Speaker 1: none of us have enough money for him to take

661
00:32:44,280 --> 00:32:47,760
Speaker 1: our phone call, but you know, he he is. He says,

662
00:32:47,840 --> 00:32:50,120
Speaker 1: we have a model and we follow it slavishly. So

663
00:32:50,240 --> 00:32:54,520
Speaker 1: one is you don't want human discretion involved. You want

664
00:32:55,040 --> 00:32:58,680
Speaker 1: an automated, rules based system, or at least a a

665
00:32:58,880 --> 00:33:01,560
Speaker 1: system with a lot of rules and maybe a touch

666
00:33:01,600 --> 00:33:04,440
Speaker 1: of human discretion. Research I did in my book The

667
00:33:04,480 --> 00:33:07,920
Speaker 1: Laws of Wealth found that over two hundred studies were

668
00:33:07,960 --> 00:33:12,520
Speaker 1: done on comparing human discretion to simple rules and algorithms

669
00:33:12,800 --> 00:33:15,640
Speaker 1: and found that nine percent of the time the rules

670
00:33:16,200 --> 00:33:20,720
Speaker 1: beat or match human level discretion PhD level human discretion.

671
00:33:20,920 --> 00:33:24,800
Speaker 1: And that's no work. And you forget it basically, like

672
00:33:24,840 --> 00:33:27,360
Speaker 1: you follow those rules to a t. Yeah, absolutely, so

673
00:33:27,400 --> 00:33:30,040
Speaker 1: you want you want something that's rules based. And even

674
00:33:30,040 --> 00:33:32,360
Speaker 1: when passive vehicles have gotten in trouble, it's because they

675
00:33:32,360 --> 00:33:35,160
Speaker 1: strayed from their rules. Now people don't know this, but

676
00:33:35,200 --> 00:33:37,640
Speaker 1: the SMP five hundred is made up of a committee,

677
00:33:37,680 --> 00:33:40,200
Speaker 1: right that selects who goes in and out, and they

678
00:33:40,240 --> 00:33:43,160
Speaker 1: have these rules about you know, it needs to be profitable,

679
00:33:43,160 --> 00:33:45,440
Speaker 1: it needs to have this many years and they have

680
00:33:45,600 --> 00:33:49,160
Speaker 1: deviated from those rules historically. They did to include A

681
00:33:49,280 --> 00:33:52,040
Speaker 1: O L back in the late nineties, yep, and they

682
00:33:52,080 --> 00:33:55,040
Speaker 1: got crushed, right and they so you hadn't been around

683
00:33:55,040 --> 00:33:57,800
Speaker 1: as long as they be. It wasn't profitable. But people

684
00:33:57,800 --> 00:34:00,240
Speaker 1: were clamoring for it, right because it was the tech

685
00:34:00,280 --> 00:34:01,680
Speaker 1: bubble and it was hot, and they're like, give me

686
00:34:01,720 --> 00:34:04,800
Speaker 1: the A O L. And like they they they buckled, right,

687
00:34:04,840 --> 00:34:06,600
Speaker 1: and they did, but they shouldn't have. And then you know,

688
00:34:06,680 --> 00:34:10,239
Speaker 1: one year later it dropped whatever and they couldn't afford

689
00:34:10,280 --> 00:34:14,400
Speaker 1: to send CDs around all our house. You want that

690
00:34:14,440 --> 00:34:18,120
Speaker 1: annoying dialote noise. Yeah, So you want something that's rules based.

691
00:34:18,400 --> 00:34:21,440
Speaker 1: You want something that's you know, has a reasonable fee.

692
00:34:21,760 --> 00:34:24,160
Speaker 1: You're gonna pay more for small cap, You're gonna pay

693
00:34:24,200 --> 00:34:27,279
Speaker 1: more for international exposure. So don't get so hung up

694
00:34:27,719 --> 00:34:30,680
Speaker 1: on you know, a three basis point fee that you

695
00:34:30,880 --> 00:34:33,279
Speaker 1: that you can't get the exposure that you need. But

696
00:34:33,400 --> 00:34:36,000
Speaker 1: you wanted to be rules based, you wanted to be

697
00:34:36,280 --> 00:34:39,040
Speaker 1: a low fee. Those are the Those are the biggest

698
00:34:39,040 --> 00:34:41,320
Speaker 1: things to me. Yeah, So when you're talking about rules,

699
00:34:41,360 --> 00:34:43,719
Speaker 1: it makes me think of one rule would be to

700
00:34:43,840 --> 00:34:46,279
Speaker 1: automated and dollar cost averaging is one of the ways

701
00:34:46,280 --> 00:34:47,560
Speaker 1: that most of us do that through a four oh

702
00:34:47,600 --> 00:34:50,000
Speaker 1: one K or through just an automatic a c H

703
00:34:50,080 --> 00:34:52,880
Speaker 1: deduction from our one of our checking our savings accounts

704
00:34:52,880 --> 00:34:55,440
Speaker 1: and it goes to hopefully a low cost brokerage account

705
00:34:55,640 --> 00:34:59,000
Speaker 1: company into a ROTHIRA or traditional area or whatever it is.

706
00:34:59,200 --> 00:35:03,000
Speaker 1: So what what other rules besides just keeping it automatic

707
00:35:03,239 --> 00:35:06,080
Speaker 1: and and doing it consistently, what other rules should we

708
00:35:06,120 --> 00:35:09,279
Speaker 1: implement to ensure that we're investing well. So just a

709
00:35:09,400 --> 00:35:12,120
Speaker 1: quick plug for automation there's nothing better that you could

710
00:35:12,120 --> 00:35:13,960
Speaker 1: do than automate. You know. One of the things that

711
00:35:14,040 --> 00:35:16,080
Speaker 1: my research has shown is that our willpower is just

712
00:35:16,120 --> 00:35:19,080
Speaker 1: so much weaker than we think, and so automation is

713
00:35:19,840 --> 00:35:22,279
Speaker 1: the number one thing that I would tell you. The

714
00:35:22,320 --> 00:35:24,680
Speaker 1: second thing I would tell you is sort of counterintuitive,

715
00:35:24,680 --> 00:35:27,360
Speaker 1: and it's too it's to celebrate winds. You know, I

716
00:35:27,400 --> 00:35:30,520
Speaker 1: feel like some people, this journey to financial freedom is

717
00:35:30,560 --> 00:35:33,200
Speaker 1: a long journey, and it takes a ton of money.

718
00:35:33,400 --> 00:35:35,600
Speaker 1: And I start research the other day that says people

719
00:35:35,600 --> 00:35:38,360
Speaker 1: are spending on average two hundred and fifty thousand dollars

720
00:35:39,120 --> 00:35:42,960
Speaker 1: in retirement on medical expenses outside of insurance premiums. I

721
00:35:43,040 --> 00:35:46,240
Speaker 1: we just need tons of money. You just need tons

722
00:35:46,239 --> 00:35:49,200
Speaker 1: of money to retire. So celebrate wins along the way,

723
00:35:49,239 --> 00:35:52,880
Speaker 1: because it really really is a slog And so, you know,

724
00:35:53,000 --> 00:35:56,040
Speaker 1: my family and I were very disciplined, but we recently

725
00:35:56,120 --> 00:35:58,520
Speaker 1: hit a big milestone for us, and we're gonna go

726
00:35:58,760 --> 00:36:01,160
Speaker 1: sploige a little. We're gonna do things we don't usually do,

727
00:36:01,640 --> 00:36:04,640
Speaker 1: and it's gonna hopefully give us that next, you know,

728
00:36:04,719 --> 00:36:07,439
Speaker 1: shot of adrenaline to go the next leg of the race,

729
00:36:08,080 --> 00:36:10,600
Speaker 1: because it's a very, very long race. And I think

730
00:36:10,640 --> 00:36:12,560
Speaker 1: you want to automate, but you want to you want

731
00:36:12,560 --> 00:36:16,840
Speaker 1: to congratulate yourself because saving is hard. Investing is hard.

732
00:36:17,360 --> 00:36:19,080
Speaker 1: One of the big points I make in the book

733
00:36:19,120 --> 00:36:21,880
Speaker 1: is that everything we're asked to do right, to take

734
00:36:21,880 --> 00:36:25,120
Speaker 1: on risk, to take on uncertainty, to take money that

735
00:36:25,160 --> 00:36:27,160
Speaker 1: we could spend today on stuff that would be fun

736
00:36:27,520 --> 00:36:30,200
Speaker 1: and put it aside for old man Daniel, who's not

737
00:36:30,320 --> 00:36:33,200
Speaker 1: very real to me. All of this is psychologically difficult.

738
00:36:33,400 --> 00:36:35,680
Speaker 1: To make sure you give yourself a break along the way.

739
00:36:35,719 --> 00:36:37,160
Speaker 1: I do want to hang out with old man Daniel.

740
00:36:37,160 --> 00:36:39,600
Speaker 1: Old man Daniel is gonna be sweet. Daniel is going

741
00:36:39,640 --> 00:36:44,440
Speaker 1: to be sweet. Cheese cheese every cheese for days, with

742
00:36:44,520 --> 00:36:47,600
Speaker 1: the cheese in a rocky chair. So also, you don't

743
00:36:47,640 --> 00:36:50,520
Speaker 1: have nice things to say about investment managers. They have

744
00:36:50,640 --> 00:36:54,440
Speaker 1: bias as well. Should investor ever pay an advisor is

745
00:36:54,440 --> 00:36:56,719
Speaker 1: a just silly to shell off his fees. Okay, So

746
00:36:56,880 --> 00:36:59,319
Speaker 1: I I work for an investment manager, so I have

747
00:36:59,360 --> 00:37:02,680
Speaker 1: to be careful right now. So I I say in

748
00:37:02,680 --> 00:37:05,000
Speaker 1: my book The Laws of Wealth, you need a financial advisor,

749
00:37:05,040 --> 00:37:07,840
Speaker 1: but not for the reason that you think. Okay, most

750
00:37:07,920 --> 00:37:11,560
Speaker 1: people when they hire a financial professional, they think the

751
00:37:11,600 --> 00:37:13,960
Speaker 1: reason that I'm bringing this person on is because they're

752
00:37:14,000 --> 00:37:16,880
Speaker 1: gonna pick hot stocks for me. They're an investment wizard.

753
00:37:17,320 --> 00:37:20,359
Speaker 1: All of the research shows that, uh, that is not

754
00:37:20,440 --> 00:37:23,719
Speaker 1: the case, right. Uh, financial professionals make the same dumb

755
00:37:23,760 --> 00:37:27,120
Speaker 1: mistakes with their money that we do with our money.

756
00:37:27,160 --> 00:37:30,160
Speaker 1: But the research also shows that people who work with

757
00:37:30,200 --> 00:37:32,720
Speaker 1: a financial professional tend to do two to three percent

758
00:37:33,160 --> 00:37:36,840
Speaker 1: a year better than those who don't, even net of fees.

759
00:37:37,040 --> 00:37:39,759
Speaker 1: And that's because they're a behavioral coach. They keep you

760
00:37:39,800 --> 00:37:42,320
Speaker 1: from doing the stupid thing. They they encourage you to

761
00:37:42,800 --> 00:37:46,720
Speaker 1: do the hard thing. So I think about ten percent

762
00:37:46,760 --> 00:37:49,920
Speaker 1: of the world does not need a financial professional in

763
00:37:49,960 --> 00:37:52,120
Speaker 1: their corner, or does not need a robo advice or

764
00:37:52,160 --> 00:37:54,359
Speaker 1: any sort of advice. They're going to figure the stuff out.

765
00:37:54,400 --> 00:37:57,440
Speaker 1: They're gonna do it by themselves. They've got the discipline.

766
00:37:57,960 --> 00:38:00,600
Speaker 1: Ten Another ten percent of the world, on the other end,

767
00:38:01,000 --> 00:38:05,719
Speaker 1: are just degenerate gamblers. There's not you know, there's not

768
00:38:05,960 --> 00:38:08,399
Speaker 1: enough good advice in the world to to save these folks.

769
00:38:08,480 --> 00:38:10,920
Speaker 1: But for a lot of people in the middle, whether

770
00:38:11,120 --> 00:38:14,800
Speaker 1: it's uh, you know, a full service financial advisor, whether

771
00:38:14,880 --> 00:38:18,320
Speaker 1: it's sort of the on call financial advice that's available

772
00:38:18,320 --> 00:38:20,880
Speaker 1: now through Schwab and Vanguard and other people for as

773
00:38:20,920 --> 00:38:23,239
Speaker 1: little as thirty bucks a month, or whether it's a

774
00:38:23,320 --> 00:38:26,839
Speaker 1: robo advisor. Most of us needs some sort of framework,

775
00:38:27,239 --> 00:38:30,040
Speaker 1: and you can ratchet that up or down depending on

776
00:38:30,120 --> 00:38:34,160
Speaker 1: how disciplined you are. But I would say that almost

777
00:38:34,280 --> 00:38:37,279
Speaker 1: all of us need some sort of hand holding, some

778
00:38:37,320 --> 00:38:39,560
Speaker 1: sort of guidance, and that is the number one thing

779
00:38:39,600 --> 00:38:42,640
Speaker 1: that an that an advisor or an advisor light does,

780
00:38:43,400 --> 00:38:47,839
Speaker 1: and its behavioral coaching and not asset selection, because you can,

781
00:38:47,880 --> 00:38:51,280
Speaker 1: I mean, you can take this weekend, read five books

782
00:38:51,320 --> 00:38:53,759
Speaker 1: and figure out how you should allocate your assets. It's

783
00:38:53,880 --> 00:38:56,799
Speaker 1: quite easy. It's very very easy to get a low

784
00:38:56,840 --> 00:39:01,040
Speaker 1: cost diversified portfolio. It's much harder to day of the course. Right,

785
00:39:01,080 --> 00:39:02,880
Speaker 1: So it's not like you said, it's not the asset

786
00:39:02,920 --> 00:39:05,040
Speaker 1: allocation part of it. It's the behavioral part of it

787
00:39:05,120 --> 00:39:07,600
Speaker 1: that's the tricky part. Um I mean, is that not

788
00:39:07,680 --> 00:39:09,920
Speaker 1: where you feel that a robo advisor could, you know,

789
00:39:09,960 --> 00:39:11,759
Speaker 1: for a low cost kind of keep you on that

790
00:39:11,800 --> 00:39:14,120
Speaker 1: path of making sure that you're you know, you've got

791
00:39:14,120 --> 00:39:16,560
Speaker 1: your pie selected and you're rebalancing and you're you're sticking

792
00:39:16,560 --> 00:39:18,799
Speaker 1: to what you want to invest in would that be

793
00:39:18,840 --> 00:39:20,799
Speaker 1: a way that folks could could save money and not

794
00:39:20,800 --> 00:39:24,160
Speaker 1: pay higher fees potentially. So there's there's really three things

795
00:39:24,200 --> 00:39:26,520
Speaker 1: that I think folks need. They need education, you know,

796
00:39:26,600 --> 00:39:28,960
Speaker 1: to to do the right thing, and a robo advisor

797
00:39:29,040 --> 00:39:32,000
Speaker 1: provides that they need the right environment, which is the

798
00:39:32,040 --> 00:39:34,799
Speaker 1: portfolio in this case. The robo advisor does that as

799
00:39:34,840 --> 00:39:38,240
Speaker 1: well as anyone um. And they need just in time advice.

800
00:39:38,320 --> 00:39:40,759
Speaker 1: They need someone to like slap the bad decision out

801
00:39:40,760 --> 00:39:43,480
Speaker 1: of them at the at the inopportune moment. And so

802
00:39:43,560 --> 00:39:46,160
Speaker 1: that is where I think that robo advisors candidly are

803
00:39:46,160 --> 00:39:49,440
Speaker 1: a little unproven, just because most of them have only

804
00:39:49,440 --> 00:39:53,520
Speaker 1: existed in a relatively sanguine market. Right It's been a

805
00:39:53,680 --> 00:39:57,200
Speaker 1: very good run for as long as the wealth fronts

806
00:39:57,200 --> 00:39:59,879
Speaker 1: and betterments of the world have been around. Now Better

807
00:40:00,000 --> 00:40:03,560
Speaker 1: and in particular is doing really cool stuff with behavioral finance.

808
00:40:03,680 --> 00:40:06,120
Speaker 1: Dan Egan is their head of behavioral finance. Does an

809
00:40:06,160 --> 00:40:09,720
Speaker 1: excellent job and does things like, you know, if someone's

810
00:40:09,719 --> 00:40:12,759
Speaker 1: about to sell, the robo advisor will pop up a

811
00:40:12,760 --> 00:40:15,800
Speaker 1: thing that says, here are your tax consequences if you sell,

812
00:40:16,040 --> 00:40:18,680
Speaker 1: and people go yuck, like you know, I hate paying taxes.

813
00:40:19,080 --> 00:40:22,520
Speaker 1: You know, and so then they're induced, oftentimes to to

814
00:40:22,600 --> 00:40:25,360
Speaker 1: stay the course. So there are subtle nudges that I

815
00:40:25,400 --> 00:40:28,520
Speaker 1: know that robo advisors are are working on. But I

816
00:40:28,560 --> 00:40:32,080
Speaker 1: think for some people still you need Bob down the

817
00:40:32,120 --> 00:40:34,560
Speaker 1: street to call you up, to come to your house

818
00:40:34,600 --> 00:40:37,520
Speaker 1: and say, hey, man, chill out. So I think that

819
00:40:37,680 --> 00:40:39,800
Speaker 1: for some people that will work, for some people that won't.

820
00:40:40,160 --> 00:40:42,920
Speaker 1: And I think that robo advisors are still kind of untested,

821
00:40:42,920 --> 00:40:45,680
Speaker 1: and nobody's more excited to see how they do than

822
00:40:45,719 --> 00:40:49,960
Speaker 1: me when where you know, we have a leg down. Yeah,

823
00:40:50,000 --> 00:40:51,880
Speaker 1: I mean, I remember during the Great Recession talking to

824
00:40:51,960 --> 00:40:55,680
Speaker 1: co workers, and people were panicked, and a lot of

825
00:40:55,840 --> 00:40:59,919
Speaker 1: folks that I knew just weren't willing to stay the course.

826
00:41:00,040 --> 00:41:02,520
Speaker 1: They just couldn't handle the heat in the kitchen, and

827
00:41:02,560 --> 00:41:03,759
Speaker 1: they said, I have to sell, I have to make

828
00:41:03,800 --> 00:41:06,640
Speaker 1: some changes, I have to put more of my money

829
00:41:06,680 --> 00:41:10,720
Speaker 1: in cash because I just I can't ride this ride anymore.

830
00:41:11,080 --> 00:41:13,160
Speaker 1: And I do think that you're right that the number

831
00:41:13,200 --> 00:41:16,359
Speaker 1: one reason to consider having a financial advisor is if

832
00:41:16,360 --> 00:41:18,799
Speaker 1: you have a personality where you are unable to stay

833
00:41:18,840 --> 00:41:20,640
Speaker 1: the course, where you're unable to obey those rules that

834
00:41:20,640 --> 00:41:22,880
Speaker 1: you've set for yourself, I think in a perfect world

835
00:41:23,000 --> 00:41:25,360
Speaker 1: because Matt recently on the show, we talked about fees

836
00:41:25,560 --> 00:41:27,880
Speaker 1: and the importance of fees right when you include your

837
00:41:27,880 --> 00:41:31,040
Speaker 1: financial advisor, and that oftentimes the fees become excessive and

838
00:41:31,120 --> 00:41:33,840
Speaker 1: a lot of people just don't have a lot of

839
00:41:33,840 --> 00:41:35,839
Speaker 1: people won't can't even be seen by a financial advisor

840
00:41:35,880 --> 00:41:38,040
Speaker 1: because they don't have enough money, right, And then there

841
00:41:38,080 --> 00:41:40,319
Speaker 1: are a lot of people who balk at the fees

842
00:41:40,400 --> 00:41:43,840
Speaker 1: because that hurts returns over time. But I do completely

843
00:41:43,880 --> 00:41:45,440
Speaker 1: understand your sentiment, and I think it makes a lot

844
00:41:45,480 --> 00:41:47,560
Speaker 1: of sense that a lot a lot of people are

845
00:41:47,680 --> 00:41:51,480
Speaker 1: unwilling to continue abiding by their rules and to continue

846
00:41:51,480 --> 00:41:54,719
Speaker 1: to invest consistently even through the hard times, even though

847
00:41:54,760 --> 00:41:58,320
Speaker 1: that's the most important time to to continue to be invested.

848
00:41:58,360 --> 00:42:00,319
Speaker 1: So I think that makes a lot of sense. If

849
00:42:00,320 --> 00:42:03,200
Speaker 1: you look at the research on the behavior gap, so

850
00:42:03,280 --> 00:42:06,839
Speaker 1: the delta between the returns of the equity markets and

851
00:42:06,840 --> 00:42:10,760
Speaker 1: what the average equity investor gets, it's usually somewhere around

852
00:42:10,800 --> 00:42:14,759
Speaker 1: fort So like over the last thirty years, SMP has

853
00:42:14,840 --> 00:42:17,920
Speaker 1: given you eight and a quarter percent, the average investors

854
00:42:18,000 --> 00:42:20,560
Speaker 1: kept like four and a half percent of that, So

855
00:42:20,719 --> 00:42:22,560
Speaker 1: they're in and out because they're in and out. So

856
00:42:22,960 --> 00:42:26,399
Speaker 1: paying an advisor one percent, which is admittedly a lot,

857
00:42:26,480 --> 00:42:28,920
Speaker 1: Like paying an advisor one percent is a lot if

858
00:42:28,960 --> 00:42:31,080
Speaker 1: you can do it by yourself. But if it saves

859
00:42:31,080 --> 00:42:33,719
Speaker 1: you a four percent delta, then it's well worth it.

860
00:42:34,080 --> 00:42:36,560
Speaker 1: And so it comes down to sort of being candid

861
00:42:36,600 --> 00:42:41,319
Speaker 1: about your level of discipline and willpower. Uh, And that's

862
00:42:41,320 --> 00:42:43,160
Speaker 1: a that's a hard thing to do. It's a hard

863
00:42:43,200 --> 00:42:45,040
Speaker 1: thing to look in the mirror and go, yep, I'm

864
00:42:45,160 --> 00:42:48,520
Speaker 1: the I'm the one the biggest problem. I'm the du

865
00:42:48,600 --> 00:42:50,680
Speaker 1: fist that's gonna sell at the wrong time. And yet

866
00:42:50,800 --> 00:42:53,080
Speaker 1: you know most of us are so yeah. So it's

867
00:42:53,080 --> 00:42:54,560
Speaker 1: almost like we don't need a Bob down the street.

868
00:42:54,560 --> 00:42:56,239
Speaker 1: We need a Terry Crews to like come and like

869
00:42:56,360 --> 00:42:59,480
Speaker 1: totally check us, right, to flex his pet and tell

870
00:42:59,560 --> 00:43:03,319
Speaker 1: us that we better stay the course. So, Daniel, for

871
00:43:03,400 --> 00:43:05,440
Speaker 1: most folks that that don't have a ton of money, right,

872
00:43:05,600 --> 00:43:08,400
Speaker 1: maybe they've got five or ten or twenty thousand even right, Like,

873
00:43:08,400 --> 00:43:10,040
Speaker 1: that's not a ton of money to be seen by

874
00:43:10,080 --> 00:43:13,799
Speaker 1: an individual advisor. Sometimes, what advice would you give to

875
00:43:13,840 --> 00:43:16,480
Speaker 1: someone in that situation who is looking to be a

876
00:43:16,520 --> 00:43:19,600
Speaker 1: better passive investor? How do you set up those rules

877
00:43:19,600 --> 00:43:22,279
Speaker 1: that you mentioned earlier. Yeah. So the first thing, and

878
00:43:22,320 --> 00:43:24,319
Speaker 1: this is again a little non traditional, I would say

879
00:43:24,320 --> 00:43:27,360
Speaker 1: to invest in yourself. You know that you can't bleed

880
00:43:27,400 --> 00:43:31,000
Speaker 1: a stone, so it takes income to be a successful investor.

881
00:43:31,040 --> 00:43:33,560
Speaker 1: And so one of the most powerful things and most

882
00:43:33,880 --> 00:43:37,960
Speaker 1: ignored pieces of financial advice is taken online course. You know,

883
00:43:38,000 --> 00:43:39,680
Speaker 1: go back to school, do what you need to do

884
00:43:40,160 --> 00:43:42,359
Speaker 1: to get your income to a place where you can

885
00:43:42,400 --> 00:43:45,840
Speaker 1: say more. So that's investing in yourself always pays great dividends.

886
00:43:46,320 --> 00:43:49,320
Speaker 1: That The next thing that I would say is again

887
00:43:49,440 --> 00:43:52,879
Speaker 1: just get started, and you can again take a lot

888
00:43:52,920 --> 00:43:54,880
Speaker 1: of risk. I think when you don't have much to

889
00:43:54,920 --> 00:43:57,520
Speaker 1: set aside, just find one or two funds that are

890
00:43:57,520 --> 00:43:59,720
Speaker 1: going to cover the water front of the whole world

891
00:43:59,800 --> 00:44:03,320
Speaker 1: for very, very minimal fees. I get get that going

892
00:44:03,719 --> 00:44:06,799
Speaker 1: and make sure that it's automated, because once it's automated,

893
00:44:06,840 --> 00:44:09,120
Speaker 1: you never know, you miss it, you never see it,

894
00:44:09,680 --> 00:44:13,240
Speaker 1: and and it won't hurt you avoid the pain of saving,

895
00:44:13,440 --> 00:44:15,759
Speaker 1: because all of my research is shown there's a lot

896
00:44:15,800 --> 00:44:19,359
Speaker 1: of psychological pain with you know, taking money and going well,

897
00:44:19,360 --> 00:44:22,000
Speaker 1: I'm going to save this. Now, you avoid that pain

898
00:44:22,040 --> 00:44:24,480
Speaker 1: of saving when you automate the withdrawal process like you

899
00:44:24,560 --> 00:44:28,920
Speaker 1: talked about before, So invest in yourself automated and celebrate

900
00:44:28,960 --> 00:44:31,040
Speaker 1: those winds along the way. Yeah. I think if you're

901
00:44:31,080 --> 00:44:33,319
Speaker 1: in the wealth building phase of life, like you just said,

902
00:44:33,320 --> 00:44:35,880
Speaker 1: like you don't have tons of money, whether you're twenty

903
00:44:35,960 --> 00:44:38,480
Speaker 1: or whether you're forty five, you can afford to take

904
00:44:38,560 --> 00:44:40,400
Speaker 1: one more risk with your investments. You don't have to

905
00:44:40,600 --> 00:44:42,799
Speaker 1: be in a target retirement fund that's exactly matched to

906
00:44:42,840 --> 00:44:45,440
Speaker 1: your age because you won't have as much risk and

907
00:44:45,440 --> 00:44:48,080
Speaker 1: really what you want, you want exposure at that point

908
00:44:48,120 --> 00:44:50,200
Speaker 1: in time where you're beginning to invest, no matter what

909
00:44:50,239 --> 00:44:53,000
Speaker 1: your age you're at right, Yeah, absolutely, well, Daniel, thanks

910
00:44:53,000 --> 00:44:55,400
Speaker 1: so much for for joining us today. We've really enjoyed

911
00:44:55,440 --> 00:44:58,240
Speaker 1: talking to you about behavioral investing specifically. I mean, there's

912
00:44:58,280 --> 00:45:00,719
Speaker 1: just so much employ other than just knowing the right

913
00:45:00,760 --> 00:45:03,560
Speaker 1: decision to make. There's so much in play kind of

914
00:45:03,600 --> 00:45:07,040
Speaker 1: between our ears, right, Like our own minds are oftentimes

915
00:45:07,080 --> 00:45:10,200
Speaker 1: the uh, the our worst enemy. So we really appreciate

916
00:45:10,200 --> 00:45:11,880
Speaker 1: you sitting down with us. Yeah, it's been it's been

917
00:45:11,920 --> 00:45:13,759
Speaker 1: my pleasure. Thanks for having me, guys. Yeah, thanks for

918
00:45:13,800 --> 00:45:15,600
Speaker 1: coming in. Man, all right, Matt, that was a super

919
00:45:15,680 --> 00:45:19,359
Speaker 1: fun conversation. I mean, like, honestly, I truly enjoyed Daniel's book.

920
00:45:19,480 --> 00:45:22,000
Speaker 1: I think I'm just fascinated by the way our brains

921
00:45:22,280 --> 00:45:25,560
Speaker 1: play trickery on ourselves and and ultimately it ends up

922
00:45:25,600 --> 00:45:28,319
Speaker 1: hurting us as as humans and as investors. Right, it's

923
00:45:28,320 --> 00:45:31,440
Speaker 1: just fascinating, fascinating conversation. Yeah, it's It's definitely true. Man,

924
00:45:31,719 --> 00:45:34,320
Speaker 1: Let's go ahead now move on to our beer. Daniel

925
00:45:34,400 --> 00:45:37,840
Speaker 1: was gracious enough to show up with some Atlanta brewing companies,

926
00:45:37,920 --> 00:45:41,399
Speaker 1: Hop Lanta, which is an I P A and will

927
00:45:41,440 --> 00:45:43,600
Speaker 1: you ever get tired of I P A? Joel n

928
00:45:43,840 --> 00:45:46,640
Speaker 1: Man Never? And this one was was interesting and had

929
00:45:46,840 --> 00:45:49,239
Speaker 1: a nice little citrus zest kind of to it, but

930
00:45:49,280 --> 00:45:52,160
Speaker 1: it also had kind of that classic I P A

931
00:45:52,200 --> 00:45:54,520
Speaker 1: bitter taste as well, so it kind of balanced, in

932
00:45:54,560 --> 00:45:57,160
Speaker 1: my opinion, the new style of I pas and the

933
00:45:57,160 --> 00:45:58,959
Speaker 1: old style, and I think it did it quite nicely.

934
00:45:59,200 --> 00:46:01,440
Speaker 1: And plus it's a hometown beer. We gotta love it. Yeah,

935
00:46:01,440 --> 00:46:05,160
Speaker 1: We're pretty much always gonna be fans of local Atlanta breweries.

936
00:46:05,239 --> 00:46:08,560
Speaker 1: And this one was Atlanta's first original brewery, so they

937
00:46:08,600 --> 00:46:11,560
Speaker 1: actually recently changed their name back to Atlanta Brewing company. Jell.

938
00:46:11,640 --> 00:46:13,600
Speaker 1: You remember when they were a red brick, but they're

939
00:46:13,640 --> 00:46:15,200
Speaker 1: red brick there for a while and then they kind

940
00:46:15,200 --> 00:46:18,919
Speaker 1: of changed back to that moniker Atlanta Brewing Company. Those

941
00:46:18,920 --> 00:46:21,040
Speaker 1: are sad days when they were red brick for multiple reasons.

942
00:46:21,160 --> 00:46:22,880
Speaker 1: The beer wasn't very good either. But they've got a

943
00:46:22,920 --> 00:46:26,000
Speaker 1: new brewer at the Helm at Atlanta Brewing Company, and

944
00:46:26,160 --> 00:46:28,080
Speaker 1: their beers have just gotten a whole lot better. The

945
00:46:28,120 --> 00:46:30,919
Speaker 1: branding is is sweet, and yeah, I thought this beer

946
00:46:30,960 --> 00:46:32,480
Speaker 1: was great. All right, Matt, And it's time to give

947
00:46:32,480 --> 00:46:36,280
Speaker 1: away three copies of Daniel Crosby's new book, The Behavioral Investor.

948
00:46:36,600 --> 00:46:40,880
Speaker 1: And if you nerd out on kind of psychology, physiology

949
00:46:40,920 --> 00:46:43,200
Speaker 1: and just kind of how that affects, you know, how

950
00:46:43,239 --> 00:46:45,719
Speaker 1: we invest, then you will really really like his book.

951
00:46:46,000 --> 00:46:47,840
Speaker 1: And he was kind enough to not only donate the

952
00:46:47,880 --> 00:46:49,479
Speaker 1: beer that we had on the show today, but also

953
00:46:49,560 --> 00:46:52,120
Speaker 1: to have donated three books for our listeners to get.

954
00:46:52,239 --> 00:46:53,760
Speaker 1: And so, Matt, you want to go into the details

955
00:46:53,840 --> 00:46:56,040
Speaker 1: of how folks that are listening can qualify for the

956
00:46:56,080 --> 00:46:58,880
Speaker 1: book give away, Yeah, Jeel, Like we've done in the past,

957
00:46:58,920 --> 00:47:00,759
Speaker 1: what you need to do to end true into the

958
00:47:00,880 --> 00:47:03,920
Speaker 1: book giveaway is head over to Apple Podcasts and just

959
00:47:04,040 --> 00:47:06,080
Speaker 1: leave us a solid review. And if you're not an

960
00:47:06,120 --> 00:47:08,360
Speaker 1: Apple person, if you're an Android person like me, you

961
00:47:08,360 --> 00:47:10,680
Speaker 1: know what, you can also leave a review. It's Stitcher

962
00:47:10,800 --> 00:47:12,120
Speaker 1: and you can do that through your web browser, so

963
00:47:12,120 --> 00:47:13,279
Speaker 1: you don't even have to do it through the app

964
00:47:13,280 --> 00:47:15,680
Speaker 1: on your phone. It's super simple. And once you leave

965
00:47:15,719 --> 00:47:17,839
Speaker 1: that review there for us, please send us a quick

966
00:47:17,840 --> 00:47:20,960
Speaker 1: email at how to Money pod at gmail dot com

967
00:47:21,040 --> 00:47:23,640
Speaker 1: letting us know as well as your screen name that

968
00:47:23,680 --> 00:47:26,799
Speaker 1: you left that review under. We'll have that giveaway going

969
00:47:26,840 --> 00:47:28,759
Speaker 1: all this week and we're going to close that down

970
00:47:28,920 --> 00:47:31,880
Speaker 1: on Friday at five pm. We'll announce that new winner

971
00:47:32,120 --> 00:47:35,120
Speaker 1: on the next Monday's episode. So thanks in advance to

972
00:47:35,360 --> 00:47:37,439
Speaker 1: everyone for doing that. Sweet all right, time to close

973
00:47:37,480 --> 00:47:39,759
Speaker 1: out another good episode. Oh and by the way, we'll

974
00:47:39,800 --> 00:47:42,600
Speaker 1: have show notes up for this episode on our website

975
00:47:42,600 --> 00:47:45,200
Speaker 1: how to money dot com. So, Joel, I think that's

976
00:47:45,200 --> 00:47:47,440
Speaker 1: gonna be it for this episode. Man, Until next time,

977
00:47:47,640 --> 00:47:49,239
Speaker 1: Best Friends Out, Best Friends Out.