The Stock Market Doesn't Care How Hard You Try (with Barry, Michael, and Morgan Housel)

The Compound and Friends

Josh Brown

Business News, News, Investing, Business

4.7 • 2.2K Ratings

🗓️ 3 December 2019

⏱️ 20 minutes

🔗️ Recording | iTunes | RSS

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Summary

The incredibly bright and insightful Morgan Housel of the Collaborative Fund drops by the Compound to discuss some of the biggest mistakes and misconceptions that plague investors year after year - and what can be done about them. Morgan talks with Michael Batnick and Barry Ritholtz about: * how there is no such thing as an optimized portfolio * why recent trends are more instructive about the near term future, but long term trends are the ally of most investors * the fact that investing is one of the only endeavors in which the application of more effort doesn't equate to better results * the hindsight bias that all of us fall victim to * the reality behind some of the most famous investor track records * the inconsistency you are required to put up with in the pursuit of long term outperformance 1-click play or subscribe on your favorite podcast app Subscribe to the mini podcast on iTunes or Spotify Enable our Alexa skill here - "Alexa, play the Compound show!" Talk to us about your portfolio or financial plan here: http://ritholtzwealth.com/ Check out our video channel, "The Compound," over on YouTube: https://www.youtube.com/thecompoundrwm Obviously nothing on this channel should be considered as personalized financial advice just for you or a solicitation to buy or sell any securities. Please see this 3,000 word terms & conditions disclaimer: https://thereformedbroker.com/terms-and-conditions/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Hey it's Barry Ritholz. I'm here with Michael Battnick. Our guest this week is Morgan Housle and we're going to discuss the three biggest mistakes investors make.
0:09.0	Welcome to the compound.
0:11.0	Morgan, thanks for coming in. Thanks for having me.
0:14.0	So you write a lot about behavioral finance and economics.
0:17.0	As do you.
0:18.0	As do I.
0:19.0	Mike occasionally dabbles in the space.
0:21.0	It's a scam. Right.
0:22.0	Well, according to Gene Fama, the whole thing a fraud so I wanted to ask you a question what do you think are some of the biggest mistakes investors make from a behavioral
0:31.0	perspective we could sit here all day and talk about the dozens of ones,
0:34.9	but a few that stick out to me.
0:36.2	One that I think is maybe like the grandfather of behavioral mistakes
0:39.7	is the idea in investing that results are going to be correlated with effort.
0:44.1	And it's a really innocent mistake because investing is I think one of the only endeavors
0:48.5	where the correlation between effort and results is not that strong. But everywhere else in life if you want to do better
0:55.2	at something you put in more effort like we know in investing if you can just dollar
0:59.6	cost average and leave it alone you'll probably do if good if not great, if not like top quartile.
1:05.4	But imagine like what other industry is like that?
1:07.6	Because you imagine telling a football player if you want to get better just sit on the
1:11.0	couch, don't do anything.
1:12.0	You're describing every doctor I've ever spoken to who wants to transfer their
1:17.2	intelligence and hard work into investing and it just doesn't work.
	...

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