Introduction to guest:
Dr. Daniel Crosby is a psychologist, behavioural finance expert and asset manager who applies his expertise to everything from financial product design to investment selection.
He is co-author of the New York Times bestseller Personal Benchmark: Integrating Behavioral Finance and Investment Management.
His ideas have appeared in the Huffington Post and Risk Management Magazine, as well as his monthly columns for WealthManagement.com and Investment News.
He was named one of the “12 Thinkers to Watch” by Monster.com, a “Financial Blogger You Should Be Reading” by AARP and in the “Top 40 Under 40” by Investment News.
When he is not consulting around market psychology, Daniel enjoys independent films, fanatically following St. Louis Cardinals baseball, and spending time with his wife and three children.
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Key quotes and takeaways from the show:
Invest in the growth of humanity (i.e. the world), rather than specific companies, in an automated way. On average, around 20% of stocks account for 100% of returns in the market. It’s highly unlikely you will pick these stocks. Use low-cost mutual funds or EFT’s to invest in a large pool of global assets.
The two biggest predictors of your success in the stock market are: (1) keeping your cost of investing low, and (2) Broad diversification. Reducing your cost of investing has a significant impact on your overall financial growth.
Beware the hedonic treadmill!
If you hold money in cash, it is being significantly devalued by current inflation (as of February 2022).
Finance, like borders, is a human construct.
The correlation between wealth and happiness flatlines at around $75,000. It’s been shown that more money doesn’t result in more happiness but it is important to, at least, cover your basic needs.
4 mistakes investors make: ego, emotionality, following the noise, overconservitism.
People watch 70% more TV because of a small change to Netflix’s “timer” before playing another show.
The sale of gum is going down because people are now looking at their phones during checkout.
Generally, the more time someone spends on social media, the less happy they are. The same is true on how much someone posts on social media.
Going with your gut is very dangerous! Go with your gut when: (1) you make that decision frequently, and (2) you get immediate feedback.
The big 5 personality factors: Openness, Conscientiousness, Extraversion, Agreeableness, Neuroticism.
There is no such thing as irrational behaviour. Behaviour always makes sense given enough context. It may be a terrible decision but it always makes sense.
Journaling or having an internal conversation: “You served me at that time but now I’ve moved to a different place.”
Name and externalise your actions and emotions.
There is a good and evil in everyone… The Yin and Yang of life.
“Until you make the unconscious conscious it will direct your life and you will call it fate.” – Carl Jung.
Explore your shadow self. This is not only made up of the “dark” part of you, but also the part of you that you do not see, the unconscious.
Bring your shadow-self into consciousness by putting yourself into new situations and noticing repeating themes, patterns or outcomes in your life.
“The more I study human behaviour the more I think your environment matters more than your personality.” Understand how you are impacted by your environment, take time to seek out the right environments for you and aim to avoid bad environments. “Each of us is just a personality in context.”
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- 00:00:00 – Offending Daniel & choking Gaz.
- 00:01:00 – Is wealth dependent on your ability to influence & understand humans?
- 00:01:57 – Is finance purely a human construct?
- 00:04:59 – Skills for building wealth.
- 00:06:12 – How technology influences people’s choices.
- 00:09:11 – Technology’s impact on health.
- 00:12:04 – The correlation between wealth & happiness.
- 00:14:16 – What if someone can’t meet their financial needs?
- 00:16:29 – Where to invest your money.
- 00:22:19 – How to invest for Dummies.
- 00:25:31 – Mistakes investors make.
- 00:28:56 – When to go with your gut (emotional decision making).
- 00:33:04 – Do certain personalities make better investors?
- 00:37:07 – An unknown recommendation.
- 00:39:14 – An unknown truth.
- 00:42:41 – Are good and evil human constructs?
- 00:46:22 – How to examine your shadow self.
- 00:49:21 – A finding that blew Daniel’s mind.
- 00:50:24 – Daniel’s most worthwhile investment.
- 00:51:46 – Where to find more from Daniel.
People and resources mentioned:
In alphabetical order:
- Carl Jung
- George Lucas
- Jordan Peterson
- Joseph Campbell
- Law of Attraction
- Maslow’s hierarchy of needs
- Star Wars
- The Behavioral Investor by Daniel Crosby
- The Laws of Wealth: Psychology and the secret to investing success by Daniel Crosby
- The Smile
- Thinking, Fast and Slow by Daniel Kahneman
- Tim Ferriss