At the Money: Behavior For Better Investing

Masters in Business

Bloomberg

Business, Entrepreneurship, Investing

4.4 • 2.2K Ratings

🗓️ 3 July 2024

⏱️ 15 minutes

🔗️ Recording | iTunes | RSS

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Summary

If you could change only one thing that would help your investing, what would it be? Your own behavior.

When it comes to investing, we are our own worst enemies. Why is this? What can we do to avoid this fate? Neurologist and professional investor Dr. William Bernstein is the author of “The Four Pillars of Investing: Lessons for Building a Winning Portfolio.” He speaks with Barry Ritholtz about how to manage our emotions to avoid poor outcomes in markets.

Each week, “At the Money” discusses an important topic in money management. From portfolio construction to taxes and cutting down on fees, join Barry Ritholtz to learn the best ways to put your money to work.

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Transcript

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0:00.0	Join global business leaders and investors at the Bloomberg Sustainable Business Summit, returning to Singapore on July 31st.
0:09.0	Take part in solutions driven discussions on how to drive business value and unlock opportunity
0:14.8	while remaining nimble in times of change and greater ESG accountability.
0:19.5	Learn more at Bloomberg Live.com slash sustainablebiz Singapore. That's Bloomberg Live.com slash Sustainable Biz Singapore.
0:24.0	That's Bloomberg Live.com slash sustainable Biz Singapore. If you could change turn on face the strange changes
0:36.0	you want to be a richer man
0:39.0	if you could change only one thing that would help you're investing, what would it be? The answer, your own behavior.
0:48.2	We humans are a mess of biases and poor decision-making. We only read or watch things we agree with, we forget our
0:56.1	worst trades, and we allow our emotions to get the best of us. We are filled with unjustified overconfidence in our own abilities. As it turns
1:06.4	out, when it comes to investing, we are our own worst enemies. I'm Barry Ritz and on today's edition of At the Money, we're going to discuss
1:15.9	how to best manage our own behavior for the health of our portfolios. To help us unpack all of this and what it means for your portfolio, let's bring in
1:25.9	Dr. William Bernstein. He is both a neurologist and a professional investor. He is the author of numerous books on investing,
1:34.7	perhaps most famously the four pillars of investing, lessons for building a winning portfolio.
1:41.8	So Bill, let's start with a simple observation from your research
1:45.6	when it comes to making risk allocation decisions in capital markets we just
1:52.2	ain't built for it explain well Barry our late
1:55.6	place to see an ancestors evolved in an environment with a risk horizon that was
2:00.4	measured in seconds sometimes fractions of a second.
2:04.0	Whereas in the modern era, our financial risk horizon extends a half a century or so.
2:10.0	So in short, we are living in the space age with Stone Age brains.
2:15.8	So let's delve into those Stone Age brains and how its evolutionary development leads
2:21.6	us Australian in modern capital markets.
	...

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