The Behavioral Investor

Wilfred Waters
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We solve the mathematical problem of causing an enormous increase in one's bank account balance through human effort. The podcast therefore has two themes, mathematics and human behaviour. Together, behavioural investing. We take a first principles approach by summarising scientific studies and interviewing psychology and mathematics researchers. This will show us the first principles. We will then reason from these first principles to the best strategy to cause optimal human investing behaviour.

  1. S3E7 🤯 Žiga Vižintin on Why Retirement Investing is Irrational

    07/18/2022

    S3E7 🤯 Žiga Vižintin on Why Retirement Investing is Irrational

    We interviewed Žiga Vižintin of https://irrationalretirement.com/about/. We talked about some common themes of this investigative series: -delay discounting -episodic future thinking -lack of intuition about growth in curves -harnessing the power of time -gamification Listen in as we tie it all together to design a retirement fund contribution stimulus app to produce irrational levels of investment in your future. WHAT WE DO We solve the mathematical problem of causing an enormous increase in one's bank account balance through human effort. The podcast therefore has two themes, mathematics and human behaviour. Together, behavioural investing. We take a first principles approach by summarising scientific studies and interviewing psychology and mathematics researchers. This will show us the first principles. We will then reason from these first principles to the best strategy to cause optimal human investing behaviour. WHERE WE ARE Twitter: https://twitter.com/ergofin Podcast: https://podcasts.google.com/feed/aHR0cHM6Ly9hbmNob3IuZm0vcy8yN2I1YzZhYy9wb2RjYXN0L3Jzcw?sa=X&ved=0CA Substack: https://behafin.substack.com/

    48 min
  2. S3 E6 🍄 The Science, Taboo and Business of Psychedelics with Tara Austin and Josh Hardman

    07/12/2022

    S3 E6 🍄 The Science, Taboo and Business of Psychedelics with Tara Austin and Josh Hardman

    In this episode we introduce you to the science, taboo and business of psychedelics. Tara Austin, consulting partner at the Ogilvy Behavioural Science Practice, wants to run as a UK conservative party candidate on a psychedelics platform. Josh is in the top 100 psychedelics influencers and founder of Psilocybin Alpha. We first came across Tara when she rescued David Nutt's psychedelics presentation at Nudgestock after his internet cut out: In turn, she introduced us to Josh after we expressed an interest in the business of psychedelics. Josh was involved in this recent piece on psychedelics research in Yahoo News. It was a terrific discussion covering a couple of significant psychedelics stocks, Atai Life Sciences and Compass Pathways. Importantly, Josh also emphasised the long term commitment of not for profits such as Multidisciplinary Association for Psychedelic Studies (MAPS) and Usona Institute in combating the taboo created by the Nixon administration. In addition to her political plans, Tara is currently involved in the Psilocybin Access Rights campaign (visit par.global or https://www.cdprg.co.uk/psilocybin). This has the goal of changing the classification of this drug so people are not criminalised for possessing it, and so it can be used as medicine. Visit the website to see how to contribute. After dispatching the psychedelics taboo, we ended with the next taboos Josh and Tara are turning their attention to. Quite inspirational guests, and we are proud to have had the chance to bring them to you. Thanks again Tara and Josh. WHAT WE DO We solve the mathematical problem of causing an enormous increase in one's bank account balance through human effort. The podcast therefore has two themes, mathematics and human behaviour. Together, behavioural investing. We take a first principles approach by summarising scientific studies and interviewing psychology and mathematics researchers. This will show us the first principles. We will then reason from these first principles to the best strategy to cause optimal human investing behaviour. WHERE WE ARE Substack: https://behafin.substack.com/ Twitter: https://twitter.com/ergofin Podcast: https://podcasts.google.com/feed/aHR0cHM6Ly9hbmNob3IuZm0vcy8yN2I1YzZhYy9wb2RjYXN0L3Jzcw?sa=X&ved=0CA

    50 min

  3. 09/06/2021

    S3E5: 🎌 Value Investing in Japan

    Last episode Nick Mishkin (https://behafin.substack.com/p/s3e4-being-intelligent-about-emotions) mentioned Keith Chen’s futured languages research. Here he mentioned Japanese is not a futured language, which leads us to this episode where we spoke with @CacheThatCheque (https://twitter.com/CacheThatCheque), a value investor in Japan! CTC mentioned a few resources to help foreigners get to know the Japanese market, such as the Buffett Code screener (https://www.buffett-code.com/), which is easy to use in conjunction with Google Translate. He recommended searching for blogs in Japanese for deep dives on businesses brought up by the screener. Examples of such blogs are: https://tsubame104.com/archives/category/%e9%8a%98%e6%9f%84%e5%88%86%e6%9e%90 https://net-net-value.com/totalranking/ https://tsubame104.com/archives/5126 https://toushi-matomeblog.com/ https://tsubame104.com/ CTC's Twitter has his portfolio pinned. During the interview we discussed Eiwa (https://www.eiwa-net.co.jp/english/). As such, CTC gave us a great overview of the Japanese market and some useful tools to find one’s way around it as an outsider. Perhaps the most important thing, however, was the discussion at the beginning on how Japan isn’t the dull place it has long been thought to be. It has grown at the same rate as Western markets in the past ten years, for example. With half the market available for purchase net of cash, much opportunity awaits for activist investors. As an aside, here is a very popular recent ergodicity tweet.  WHAT WE DO We solve the mathematical problem of causing an enormous increase in one's bank account balance through human effort. The podcast therefore has two themes, mathematics and human behaviour. Together, behavioural investing. We take a first principles approach by summarising scientific studies and interviewing psychology and mathematics researchers. This will show us the first principles. We will then reason from these first principles to the best strategy to cause optimal human investing behaviour. WHERE WE ARE Substack Twitter Podcatchers YouTube

    46 min
  4. S3E4 🤗 Being Intelligent about Emotions with Nick Mishkin

    07/25/2021

    S3E4 🤗 Being Intelligent about Emotions with Nick Mishkin

    Nick is doing an MA in behavioral economics at IDC Herzliya (https://www.idc.ac.il/en/schools/rris/pages/behavioral-economics.aspx). We reached out to him for an interview because he curates the Behavioural Economics podcast playlist (https://open.spotify.com/playlist/2qVC324gaGLfO9HVoSddNv?si=hg8DUYx0QKGnEliXZ_nYiQ&nd=1). As it happens, he’s also been interviewed on Merle’s blog (https://www.moneyonthemind.org/post/interview-with-nick-mishkin), whom we interviewed recently ourselves! Yes, we’ve reached that stage of penetrating the behavioral finance landscape. Have a read of the reference list below for the topics he covered in this interview. The most useful point for our mission to understand why no one executes on Ben's Billion Dollar Compounding Plan is futured language, the first study below by Keith Chen. REFERENCES Chen, M. K. (2013). The effect of language on economic behavior: Evidence from savings rates, health behaviors, and retirement assets. American Economic Review, 103(2), 690-731. Accessed 24/7/21: https://www.jstor.org/stable/pdf/23469680.pdf. Crosby, D. (2018). The Behavioral Investor. Harriman House. Accessed 24/7/21: https://www.amazon.co.uk/Behavioral-Investor-Daniel-Crosby/dp/0857196863. Danziger, S., Levav, J., & Avnaim-Pesso, L. (2011). Extraneous factors in judicial decisions. Proceedings of the National Academy of Sciences, 108(17), 6889-6892. Accessed 24/7/21: https://www.pnas.org/content/pnas/108/17/6889.full.pdf?nr_email_referer=1%29%2C. Levav, J., & Argo, J. J. (2010). Physical contact and financial risk taking. Psychological Science, 21(6). Accessed 24/7/21: https://journals.sagepub.com/doi/abs/10.1177/0956797610369493. Levav, J., & McGraw, A. P. (2009). Emotional accounting: How feelings about money influence consumer choice. Journal of Marketing Research, 46(1), 66-80. Accessed 24/7/21: https://journals.sagepub.com/doi/pdf/10.1509/jmkr.46.1.66. Matsumoto, D., & Willingham, B. (2006). The thrill of victory and the agony of defeat: spontaneous expressions of medal winners of the 2004 Athens Olympic Games. Journal of personality and social psychology, 91(3), 568. Accessed 24/7/21: https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.491.414&rep=rep1&type=pdf. Simonsohn, U. (2007). Clouds make nerds look good: Field evidence of the impact of incidental factors on decision making. Journal of Behavioral Decision Making, 20(2), 143-152. Accessed 24/7/21: https://onlinelibrary.wiley.com/doi/pdf/10.1002/bdm.545. Thaler, R. H. (1999). Mental accounting matters. Journal of Behavioral Decision Making, 12(3), 183-206. Accessed 24/7/21: https://onlinelibrary.wiley.com/doi/abs/10.1002/%28SICI%291099-0771%28199909%2912%3A3%3C183%3A%3AAID-BDM318%3E3.0.CO%3B2-F.

    42 min
  5. S3E3 🏦 Snoop: Open Banking and Behavioral Finance

    07/11/2021

    S3E3 🏦 Snoop: Open Banking and Behavioral Finance

    Paul Lloyd, CMO of Snoop, tells us about how the app arose through the introduction of open banking legislation, and exists to help people save money whilst monitoring their spending. He mentioned using Openwrks.com for bank data, although they themselves need to perform additional data cleansing. A nice function of the app is displaying user contributed tips on deals or cheaper services. It was a privilege to hear from someone with Paul's depth of experience, having spent 20 years at Virgin Money prior to the Snoop venture.   More here: https://snoop.app  WHAT WE DO     We solve the mathematical problem of causing an enormous increase in one's bank account balance through human effort. The podcast therefore has two themes, mathematics and human behaviour. Together, behavioural investing. We take a first principles approach by summarising scientific studies and interviewing psychology and mathematics researchers. This will show us the first principles. We will then reason from these first principles to the best strategy to cause optimal human investing behaviour.     WHERE WE ARE   Substack: https://behafin.substack.com/  Twitter: https://twitter.com/ergofin  Podcast: https://podcasts.google.com/feed/aHR0cHM6Ly9hbmNob3IuZm0vcy8yN2I1YzZhYy9wb2RjYXN0L3Jzcw?sa=X&ved=2ahUKEwjowqeApeLtAhU-LbcAHUHCBm0Q9sEGegQIARAC  YouTube: https://www.youtube.com/channel/UC4MEB2vMIQYNOqz2ofyLiBQ

    37 min
  6. S3E2 ✔️ Merle van den Akker: Compounding Investments, Alone, Won’t Fix Poverty.

    06/15/2021

    S3E2 ✔️ Merle van den Akker: Compounding Investments, Alone, Won’t Fix Poverty.

    Merle van den Akker is a behavioral science PhD candidate at Warwick Business School. She runs the Money on the Mind (http://www.moneyonthemind.org/) blog and co-hosts the Questioning Behavior (https://youtube.com/channel/UCcz8ms4jDnmqcRlOR5RQSIg) podcast. She can also be found on Twitter (http://www.twitter.com/moneymindmerle). In this interview we discussed her research on contactless payments and other technology-based means of removing friction and a sense of loss from the paying process. This is a fundamental issue for those practicing personal financial self care, who wish to maximize the proportion of their income that is invested rather than lost during unnoticeable spending events. The interview also covered research on poverty and the feeing of time as someone struggling to survive. We discovered that hyperbolic discounting rates modulate depending on one’s level of financial distress. A key study she cited is On the Psychology of Poverty (https://science.sciencemag.org/content/344/6186/862). This lead us to a discussion of structures in society that stop people lifting themselves out of poverty, a key challenge to our assumption that the compounding sheet discussed throughout this series shall be sufficient to take care of people’s financial prosperity. Similar to our S1E9 interview with Leigh Caldwell, she pointed out that business ventures are a major differentiating factor in finding financial success. It appears then that not only good financial compounding behavior but also starting a business shall need to be a focus of this podcast going forward, to answer the question why almost no one is seriously on a path to accumulating a billion dollars within 3 generations. Finally, as a PhD candidate, Merle was an excellent source of information on conferences: https://eshop.qmul.ac.uk/conferences-and-events/conferences-events/conferences-events/behavioural-finance-working-group-2021 http://www.rbfc.eu/ https://waset.org/behavioral-finance-and-markets-conference-in-october-2021-in-paris https://conferenceindex.org/conferences/behavioral-economics https://www.aobf.org/ https://www.behavioraleconomics.com/event/boulder-summer-conference-on-consumer-financial-decision-making/ https://www.consumerfinance.gov/data-research/cfpb-research-conference/2021-cfpb-research-conference/ https://warwick.ac.uk/fac/soc/wbs/subjects/bsci/events/spudm_2021/ https://www.ukfinance.org.uk/events https://cepr.org/content/cepr-network-household-finance

    1h 1m
  7. S3E1 🔥 Behavioral Design in Fintech with Francesca Johnston

    05/29/2021

    S3E1 🔥 Behavioral Design in Fintech with Francesca Johnston

    Francesca Johnston (https://twitter.com/FrancescaChess) is a behavioral science master’s student at the London School of Economics. We talked applications of behavioral design to fintech.  The premise of latest book by Dr Grace Lawden from LSE was hyperbolic discounting: https://www.amazon.co.uk/Think-Big-Small-Steps-Future/dp/0241420164/ref=sr_1_1?dchild=1&keywords=grace+lordan&qid=1622051681&s=books&sr=1-1. This author states that the most effective behavior change means is medium term, not long term: 5 years. Fintech BD exmples: Episodic future thinking by NatWest: contrasting yesterday, today and tomorrow’s versions of the self: https://www.moreaboutadvertising.com/2021/03/natwest-strikes-an-optimistic-note-with-thepartnerships-new-tomorrow-begins-today-line/. Aged images of your future self helps to reduce the effect of delayed/hyperbolic discounting: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3949005/. Monzo: Designing good mental health into the way we bank: https://www.designcouncil.org.uk/news-opinion/monzo-designing-good-mental-health-way-we-bank. Plum: an app for your financial health and wellbeing: https://withplum.com/. Effects: Prospect theory is composed of loss aversion, anchoring and the probability effect: https://en.wikipedia.org/wiki/Prospect_theory. It is about how humans make decisions where there is a degree of uncertainty, such as investing. Memories are built based on our biases, they can be distorted by: duration, neglect, forecasting bias, spotlight effect (https://thedecisionlab.com/biases/spotlight-effect/). Peak-end effect: https://en.wikipedia.org/wiki/Peak%E2%80%93end_rule. Loss aversion: https://en.wikipedia.org/wiki/Loss_aversion. Anchoring: https://en.wikipedia.org/wiki/Anchoring_(cognitive_bias). Losses are felt twice as much as equivalent gains: https://milfordasset.com/insights/investors-feel-losses-twice-much-gains. Lunch effect: judges just before lunch sentence more people: https://www.nytimes.com/2011/08/21/magazine/do-you-suffer-from-decision-fatigue.html.

    37 min
  8. S2E10 👺 Behavioral Design with David Fanner

    05/13/2021

    S2E10 👺 Behavioral Design with David Fanner

    We interviewed David Fanner, behavior analyst at Ogilvy, about how to execute on Ben's Billion Dollar Plan from S1E1. David can be found at https://twitter.com/utterlydavid. David’s behavioral science heroes are Rory Sutherland (https://www.amazon.com/Alchemy-Curious-Science-Creating-Business/dp/006238841X) and Nicholas Christakis (https://en.m.wikipedia.org/wiki/Nicholas_Christakis). Here are some notes on the first principles he mentioned. Get who to: Use a “Get who to” analysis. As a first step, “Get 18-34 year olds to start investing”. As a second step, look at retention: “Retain family members in the behavior continuing the dynasty.” You can also do a COMB analysis (capability, opportunity, motivation = behavior). -Capability: physical, mental (knowledge about how to invest). -Opportunity: physical and social. Design of the lift vs the stairs. If stairs are further than the lift then the physical opportunity favours the lift. Social: do you or the office identify as stair users, are you a weirdo for using stairs? There can be a social barrier or bitter divide between groups. -Motivation: reflective, automatic (95% of decisions are automatic). Priming relates to automatic. Put incentives in the present: A participant in a prior Nudgestock (https://www.nudgestock.co.uk/) stated that putting the incentives in the present is key. A pint at the end of the month is less motivating than something nice now. With Ben’s Billion Dollar Plan we have the opposite, a payoff 3 generations later. Humans have multiple time perspectives: Zimbardo - time perspective inventory, there are more than a handful of time perspectives that we shift in and out of throughout the day, here’s a speech by Zimbardo https://youtu.be/0YuzfwZlTJ0. Naming: name it after yourself or something meaningful. ‘Ben’s Billion Dollar Plan’. As it’s named after you, you can claim credit in the now. The concept of designated driver, spread through soaps, made it ok for one person in a group not to drink for the good of others. Name the investor similarly. Make the desired behavior a default: Prefilled boxes. Tap and go. Remove the potential to fiddle. Add friction to undesired behavior. Goal gradient effect: As we approach a goal we put more effort toward it. Make mini milestones, thousands of them. Design the environment: How does everything in your life point to this behavior?  Fresh start effect: People are much more likely to start new behaviors at temporal landmarks.  Streaks: you’ve been doing this for x days in a row. Backfire effects, you need a forgiving streak. Variable rewards: variable rewards elicit a far more enthusiastic, effortful response compared to constant rewards. Badges: fitness apps often use badges, as do computer games and some investing communities such as www.strawman.com. Accountability buddies: if you have a buddy to hold you to account, they can keep you on course. Private clubs: Invite only clubs are far more interesting. Acquisitions are more likely to be the ones who will be good for the service as they’ll be nominated by people already in the club. Members also get to subtly signal to the in group that they’re part of the same thing.

    1h 6m
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About

We solve the mathematical problem of causing an enormous increase in one's bank account balance through human effort. The podcast therefore has two themes, mathematics and human behaviour. Together, behavioural investing. We take a first principles approach by summarising scientific studies and interviewing psychology and mathematics researchers. This will show us the first principles. We will then reason from these first principles to the best strategy to cause optimal human investing behaviour.

Information

  • Creator
    Wilfred Waters
  • Years Active
    2020 - 2022
  • Episodes
    27
  • Rating
    Explicit
  • Copyright
    © 000000
  • Show Website
    The Behavioral Investor