Episode 34 – Positive Behaviour & Investing Successfully with Dr Daniel Crosby
Chris, Dave and Producer Tommo take a look at investments in this first of a three part series. Chris interviews psychologist and behavioural finance expert Dr Daniel Crosby. They chat about how we can modify our natural behaviours to increase our chances of investment success and more importantly enjoy our investment journey. There are some great takeaways about positive behaviours we can apply to increase our financial wellbeing. We have some great money saving tips from #tightasstommo the man who never knowingly overspends and plenty of laughs throughout this longer than usual bumper packed episode.
0:10 – Welcome and introductions
4:20 – The topic of this podcast – part one of a three part series on investments.
Investing is an outcome of money, not a way to get wellbeing, yet it is a hugely important part of finances.
5:20 – This episode, and interview with Dr Daniel Crosby. How we can modify our natural behaviours to improve our chances of investment success.
6:00 – Regular features
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7:00 – Backfiring jokes featuring Gerald Ratner, credit cards and hooligans at Topman
10:22 – #TightAssTommo tip of the week – swap pennies in the piggy for notes and watch the savings mount up quickly
13:57 – Interview with Dr Daniel Crosby, Psychologist and behavioral finance expert from America
Looking at how our behaviour effects our approach to investing. If we modify our natural behaviours we can increase our chances of investment success and enjoy our investment journey.
This interview is based on Daniel’s book The Laws of Wealth: Psychology and the Secret to Investing Success
14:35 – The story of the Guinea-Worm
16:30 – Financial planning is simple, work out what you want from life and spend your money on that – Chris Budd
16:50 – Positive behaviours for financial happiness
People do not respond well when told what not to do, so give people what to do ideas instead.
18:00 – Control, we have less control than we think we do and the problems this presents.
18:48 – We are stupid when we need to be smartest
We can loose 13% off our IQ when under stress. To gain control back it is best to set processes in place when we are in a cool emotionless state to guide you through scary times.
We are easily contextually manipulated, with retail experiences a prime example.
20:30 – The Locus of Control
22:10 – The behaviour gap – our feelings drive risk perception
23:15- Central tendencies that lead to poor behaviour
25:00 – Feelings drive decision making and risk perception
26:15 – The perversity of risk in financial markets is when people perceive the markets to be least risky is actually when they are the most risky. – Howard Marks, Asset Allocator at Oaktree Capital
27:00 – Our efforts to avoid risk brings its own risks
28:00 – Your life is the best benchmark to judge financial risks
29:55 – You are not special!
We think it is not going to happen to me – that is a dangerous way to invest
Link to the TEDx Talk – You are not that great
31:30 – Politics either side of the pond and rosy retrospection
33:37 – People prefer a negative certainty to an uncertainty with a potential positive
34:40 – Markets are very scary for people. We only talk about the shares that go up with a lot of pressure for a short term approach to investments.
37:40 – Wall Street Bizzaro World
We have an idea of what we will be doing in 10 minutes, 10 days even, yet we will answer with uncertainty about what we will be doing in 10 years. Markets work the opposite, the next 10mins, who knows. yet we can see where the markets will be in 10 years with relative certainty.
38:50 – It is learning to think in these opposite ways that makes it difficult to be an investor and what makes a financial planner so valuable
39:15 – Takeaways about this interview from the guys
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