Investing Is Not Knowing
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 17 June 2020
⏱️ 25 minutes
🧾️ Download transcript
Summary
How successful investing requires judgment and humility not accurate forecasting ability.
Topics covered include:
- Why pretending to know when you don't is harmful.
- Why true experts admit their limitations.
- Why David recently increased his allocation to stocks in his portfolio.
- How the number of new retail brokerage accounts has exploded.
- How the stock of the bankrupt company Hertz is a great example of how not to invest.
- What is privilege and what should we do about it.
Thanks to NetSuite and Aspiration for sponsoring the episode. To open your Aspiration Spend and Save cash management account, text DAVID to 64-000
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Transcript
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| 0:00.0 | Welcome to Money for the rest of us. This is a personal finance show on money. How it works, how to invest it and how to live without worrying about it. |
| 0:10.0 | I'm your host David Stein today's episode 302. It's titled Investing |
| 0:17.1 | is not Knowing. |
| 0:19.4 | Last week Lippur and I went camping for a few days and on Thursday we drove up a gravel |
| 0:27.0 | road that followed Spring Creek. Spring Creek flows into the Salmon River. We went through many switchbacks. The |
| 0:37.1 | views were stunning, the wildflowers amazing, and we got to over 8,000 feet, but we got to a point where we could not go any further because of snow. |
| 0:48.0 | That's always disappointing when you're out in the wilderness and you want to just go a little further and you can't because the snow hasn't melted yet. |
| 0:57.0 | Before we turn back, I decided to check the internet, because when you're at 8,000 feet, you actually can access some data on your phone. |
| 1:05.0 | I happened to flip to Apple News and it said the Dow Jones Industrial Average had plummeted 1862 points that day. |
| 1:17.0 | 6.9% due to a spike in COVID-19 cases. |
| 1:25.0 | That was not what I wanted to see. |
| 1:30.0 | I felt bad. |
| 1:32.0 | The previous Friday I released the June 2020 Investment Conditions |
| 1:37.8 | report on Money for the Restless Plus where I mentioned that |
| 1:42.2 | investment conditions were read but on the cusp of turning yellow. |
| 1:46.0 | We rank investment conditions red bearish, yellow neutral, green, more bullish. We had increased risk incrementally in our model |
| 1:55.9 | portfolios based on that investment conditions report. We added some |
| 2:01.0 | preferred stock and we added an allocation to dividend paying Japanese and US small company stocks. |
| 2:10.0 | I felt like I had been wrong, like I made a mistake, which we feel often in investing. |
| 2:20.6 | But in order to be wrong, you have to have made a prediction to say something was going to happen and it didn't. |
| 2:27.0 | But that's not what investing is, at least to me. |
| 2:31.0 | It used to be when I was an investment manager. I felt like my job was to |
... |
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