Category: Episodes

Do you wrestle with the idea of leaving your savings in an account earning next to nothing versus investing it in the stock market?

Do you use investment strategies that allow you to work with your nature, rather than against it?

Are you careful to seek investment advice from those who share your investment goals, or do you get caught up in the trends of day traders?

Morgan Housel, author of The Psychology of Money, joins us to discuss why investing is not the study of finance, but the study of how people behave with money. Morgan is an award-winning financial journalist, former columnist for the Wall Street Journal and The Motley Fool, and one of the foremost thinkers in the world of investing.

As a long-term investor who shares our buy-and-hold philosophy, Morgan has behavioral finance insights that can help us invest for financial independence with more clarity and a better understanding of ourselves.

We discuss how to develop self-awareness around biases, the importance of flexibility for long-term strategies, saving like a pessimist and investing like an optimist, becoming durable in the face of market adversity, the key difference between patience and stubbornness (and how it affects your mindset), expectation management, the importance of bonds and emergency funds, and a difficult lesson about tail risks that Morgan learned at age 17.

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How many times have you made a decision – big or small – only to regret it later?

            “I wanted to fund my IRA this year, but that vacation was calling my name…I should have known better. Now I feel behind.”

            “I really wanted to take that out-of-state job, but I talked myself out of leaving my family and friends behind. Now I’m unhappy thinking about what could have been. How stupid of me.”

            “Ugh, I knew I shouldn’t have eaten all this ice cream, but it was too good to put away. What was I thinking?”

But…how could you have known?

We can’t make decisions with 100 percent certainty. Therefore, we can’t know how something will turn out.

Yet most of us get stuck in analysis paralysis, desperate to gather as much information as we possibly can before making a decision.

And when that decision doesn’t turn out as we hoped, our response is, “I should have known!”

How can we break this cycle? How can we accept that we don’t have total control over the outcomes of our decisions? How can we forgive ourselves, and others, for not getting it right?

Most of all: how can we improve our decision making skills to avoid this scenario in the first place?

That’s what today’s guest, Annie Duke, best-selling author of Thinking In Bets, is here to tell us.

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What process do you use to make decisions?

“Uhh … I put together a pros and cons list!”

“I harness my awesome spreadsheet skills and work out the variables in cells.”

“I ask others for their opinions and seek information from people who have been in my shoes.”

All of these tactics are common decision-making techniques…but they’re not processes.

What happens when you get stuck on a critical decision that you need to make quickly?

Does the intensity of the situation get the best of you? Do you make the decision based on your gut reaction? Or do you work calmly through a list of techniques that will help you arrive at a well-informed decision?

If you rely on your instincts in the heat of the moment, that’s natural. But it won’t lead to the best outcome, and it lacks process.

Today’s guest is here to share two decision making processes that can help you cut through the noise and arrive at a well-thought out decision. If you love practical guests with information that you can apply right away, you’ll love this episode.

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