Risk aversion. I'm a coward and the fear of losing my money was kept me away from investing for the longest time. Even when interest rates fell below 1%, I still opted to keep saving because at least there was no risk of losing my money in a savings account and then I learnt about inflation. 🙃
I'm too optimistic and believe in a companies story quite easily when it is covered in some article or whatever. Is there a bias for that? I have to have a rule where I don't buy anything unless I have sat on it for a day or two first. Great vid by the way!
I was very risk averse up to March 2021, then during lockdown started watching and learning about Index funds. It is scary, that I had so much ready cash roughly 50% cash 50 % in HL ISA and Sipp. Everything is with Vanguard now. I have increased my portfolio by 41% (8% is growth), the rest from cash invested. Currently got plenty of years cash for backup if anything goes wrong, so in August I have 30k maturing out of a Fixed Rate Account, so will be looking to invest that. I already have a lot in the S&P 500, some in ESG and might look at the U.S. Equity Index Fund - Accumulation for the 30k. I eventually want to get myself down to 2 years worth of ready cash, which I know is still probably too much. Also always watch your videos to the end, keep up the great work
👍🏻 great content! By the way, regarding your bets examples, I think more time should have been placed on the statistical analysis. Some of these bets make lots of sense on a repeated instance, but become risky if you know the occurance of it is limited to once. For instance, a 50/50 probability of either losing 1000 or winning 5000 is a good or bad bet depending on (1) how much 1000 is of your total assets and (2) how many times your repeating the bet. If 1000 is, say, 80% of your assets and you do the bet only ONCE, the value of those 1000 far exceeds the potential benefit, because 50% of the time you will become broke. Now of you know its a bet you can repeat, say 10 times, it becomes a no-brainer because the bet is free money at this point. Therefore the probability calculations are important for the decisionmaking.
Thanks for the feedback Tommy, yes I’ve heard that from others . it seems I didn’t quite frame is all correctly.The reference point of how much money you have certainly affects decision making.
A good investor is a person who continues to regularly invest and invests in the long term . If you genuinely believe that a stock is under valued then it is always a good idea to invest in it, especially when there is a downturn in the markets. The more you buy and sell, the greater the risk of under performing but the more you buy and hold, the greater the chance of at least matching the markets the longer you hold on to the stocks. Patience is a virtue
Always watch to the end. Your investing/pension planning ideas have helped me revalue my investment and retirement plans. The hardest part is always finding the best way to stress test my plan
@@JamesShack I started late in life (52) and comfortable taking high levels of risk. I think its realistic that I will retire mid 60s with a very comfortable investment pot. The main threats to the pot is (1) not investing enough over a relatively short period of time (10-15 years) and (2) choosing the wrong year to invest in. I am fortunate that the job I do is working from home and its common for workers to stay with the company even in retirement. So my strengths are that my retirement date is flexible and I have a safety net should I need to delay it by 1-5 years. My other other lever to failure is my mortgage, again, started late and its due to end when I am 74. I am unsure of the direction I want to take with this as yet.
Things to focus on would be, like you said, longevity in your job but also in your health. Starting later is fine, you can always push things back - so long as you stay healthy for longer! You can get Lifetime mortgages these days if over 55 which can help solve that problem. No one know what the markets will do in the future, so now is as good as any time to invest. It's only in hindsight that we can look back and say that was "good" or "bad" but it wasn't really - just luck! That uncertainty is hard to accept but that's the truth of it. If you're still 10+ years off retirement, that's still plenty of time to see growth.
👍 60 years old UK guy just retired from teaching and doing part time work to avoid taking too much of my pension pot. I watch a lot of your videos James. Very interesting
👍👍Another way to get out of the "dont sell at a loss" mode is to view each stock/fund like a traffic jam. All the other lanes are moving faster than yours, so just switch lanes. Then switch again when the current lane stalls (obviously not immediately for investing, Id give it a few months). If you jump back to your original stock/fund in a few months time, wont you be ahead compared to not changing lanes? 👍👍
👍I watch everyone of your videos from start to finish. Very informative and thought provoking. It would be great to have a video on more exact details about the processes you mention to avoid our cognitive bad behaviours.
👍🏻 The discussion about aversion to risk of losing money reminded me of the story recently where a US men’s football team took a risky contract but the women’s team negotiated for a less risky contract.
Hi James thank you so much for putting the time and effort into these lectures, the information, insight and perspective are fantastic, it makes me wish I’d learnt more about financial education when I was younger, and the missed opportunities I could have benefited from with some simple guidance early on in my financial career.
Great stuff, James, thank you. The probability questions were unfair though. Probability only works statistically if the same bet is taken multiple times. You did not ask the question that way. You implied the listener was just making this bet once ("Which would you rather"), not multiple times. Obviously someone will only choose the chance not to lose rather than the sure lose if someone only has one stab at it. Just like most people would choose the sure win of a slightly lower amount than the gamble of a slightly higher amount, IF they only get one chance. The statistical analysis is only valid when the dice is rolled multiple times. Most of your stuff makes sense but this was utterly invalid because of the trick you played in the wording of the test questions. (I would give you a thumbs up but emoticons are a pain in the arse on this system.)
And again, you've smashed it out the park. Quality is definitely greater than quantity. I watched to the end as always. Found this really informative and really just corroborates the fact that direct debits or standing orders into investment funds are the best option. I think the riskiest part (for me atleast) is when it comes to the annual or semi annual re-balancing. Could we get a video on that?
Haha! Thank you. Yes i've started to realise that it's worth slowing down and even doing 2 vids a month just so you can put more thought into the ideas! Yep, I'm gonna do one on that very soon. Some title like "Why you should sell your winners and buy your losers"
I love this! I used to sit through movies I wasn't enjoying just to get my money's worth or eat a meal I wasn't enjoying for the same reason. It's ridiculous. You're right, we need to think more clinically and cut our loses.
These are actually good life lessons, not just with investing. One of the better videos out there. I like how you got my attention with the click bait offensive title :)
Agree. The videos are simple enough for the average Joe to understand and really should be taught in school mandatorily. Excellent channel. Wish I discovered it at 26 not 36 but nevermind. I at least now have money to invest.
Great video, I read Daniel Kahneman Thinking Fast and Slow; and Nassim Nicholas Taleb Black Swan etc...your ideas fit perfectly with their observations.
While I agree with what you say, I wouldn't be so harsh on people that took out their savings when everything crashed in March. Not everyone was fortunate to be employed, lots of relationships were tested, and for corporations, no one knew quite what they were in for. But yes, it's better to hold the course than take a loss.
👍 - ive recently started watching your channel, only currently 21, and once i have finished university and have a full time job, one of the first things ill be doing is getting a financial advisor. Ive been investing from 18, but there is always more to learn and im still not even close to the 100k figures. Currently making my way through 5 figures though, thanks to some good last 2 years :)
👍🏻 Great content again James - it’d be interesting to see how people’s risk aversion changes when the potential loss increases. I imagine many more people would happily risk losing $100 from a coin toss for the chance to win $150, compared with those who would accept the risk of losing $10,000 against winning $10,050 even though the expected return would be the same. And if you could toss the coin infinite times of course you’d be crazy not to accept the bet.
Hey! So typically it falls off between 1.5-2 times the loss. So $100 loss for $150 gain up to $100 for $200 gain. After 2x it really drops off. This is a test of people's attitude to risk. You should check our Daniel Khaneman's book Thinking Fast and Slow. It goes way deeper than what i've done here and across even more biases
The reason why most people are scared of risks is that the potential gains would have a very small positive impact on your life, while a loss can have a severe negative impact on your life. Would you toss a coin to win 10 homes but if you lose you lose your home? Unless you want to be at the absolute top of wealth you should try be as safe as possible with your personal finance.
You should not take risks with money you need. Such money (emergency funds, money to buy something in the next 2 years) sits in my savings accounts as cash. So long as one is doing that, I think one can take a lot more risk with any additional money they invest.
The reference point is very important as you say. If you've only got $100 then you should not be taking the bet. Which is why everyone says you should only invest money you can afford to keep invested for 5+ years
👍I thought UA-cam gave the figures about how much of the video is watched. (So as you can see I have never done a UA-cam video). Thanks for the good and useful info👍
👍👍 great video, though I think when you look at the money aspect I think a lot of the choices you make are based on how much that amount of money means to you. As an example, if I play with £10 bets, I'm going to be more likely to take a risk than i'f I'm playing with £100,000 bet. Emotional reactions are always difficult to control, from the sending of a stroppy email, arguing with your kids or using the car horn, there are many times when we have to put the chimp in the box and keep it under control.
Thumbs up - another good video James. Very interesting point on 11:10; I've seen many UA-camrs say that don't lose money until you sell (i.e. Lock in the loss); but I've never thought of it like "I wouldn't buy it at this price, so why would I hold on to it at this price?". I mean I will am going to hold on lol but you've certainly given me something to think about
Again, agree with your point about risk aversion, but not with your maths. Statistics 101, expected value is rarely, and sometimes never, the likely value - and so is meaningless. You probably meant that you might expect to gain from the bet if you could repeat it enough times. Unless you’re allowed to repeat the bet as many times as you want, a 50% chance of losing is fairly high (depending on your appetite, I guess). Suppose the bet was get a free big house or lose your own existing home - maybe your appetite is different now? “Do I really need a bigger house enough to risk losing the one I am perfectly happy with?”, for example.
👍 Thank you, James for your very informative videos. Could you also perhaps discuss/compare overpayments into a pension fund over contributing the same amount (taxed) into an ISA? Thinking about a longer-term scenario of fund growth (at least 10 years). Some pension funds do not offer the flexibility for as high growth as a general stocks+shares ISA does and perhaps it is better to pay tax up front in the smaller amount going in rather than on the larger amount being withdrawn later?
Hi James, thanks for this. As I was watching and considering your questions, it became obvious that one-off choices are more risky than repeated ones, because repetition tends towards the more probable outcome. One coin toss is either heads or tails, but 1000 coin tosses is likely to be close to 500/500. And so it is with the bets you offered. Even if the odds are in your favour, you'd feel pretty stupid if you lost. So a trader maximising wins and minimising losses can be profitable with less than 50/50 success, though success is likely, over time to be 50/50. But a long term investor making a single deposit is vulnerable. Cost averaging, I suppose, is the simplest answer to that. Depending on the investment time frame, there is a regular option to pull out, or to grit your teeth and keep pushing money in!
Great content James, keep it up. Especially like the psychology link which I as a inexperienced investor fell foul of. Learnt my lesson, DCA all the way, no matter if I have the cash in the bank or not, DCA!
👍 At the moment the thing I'm mostly affected by is Confirmation bias. I came here following one of your links that I thought would take me to a video on Factor investing. I'm glad I stuck around to the end of this video though.
With these cognitive errors in mind, how do we decide between the right approach: between cutting a loss on something like BTC for example vs not selling at a low point and holding on for recovery.
The question did not state i could repeat the same bet. It is a big difference flipping a coin once and 1000 times. Considering a one time bet the responses makes sense.
👍 Howdy James, just stumbled on your channel and it has be refreshing! Just like you said in your ‘How to Save Your Retirement Plan in in 2022’ vid from 0.57 seconds until ~1:20 ish. Would be good to contact you in the near future. Keep up with this style of content! 👍👍
👍Thanks James, this is why I am hiring an advisor so they can give me objective advice. I know what I need to do which is to invest a big lump of cash, but I keep questioning myself.
Always interesting content . I watch till the end , I am probably risk adverse but now I have studied and learn more about how to calculate risk etc I am getting better
I'm glad I sold my Orange shares earlier this year. I held onto them a decade too long. Since selling them, and reinvesting in the S&P, that has performed relatively worse than orange in the intervening period. But I still feel better. The glory days for that stock are definitely in the rear view mirror
'In the cut and thrust of financial life, always back self-interest, because you know it's trying!' A quote by the great Malcolm Turnbull Ex-Australian P.M. And yes I could write a book on Loss Aversion theory - ps studies suggest it's about 2 to 3 times more pain of losing something over joy of gaining something eg say a £50 note in your suit trousers !
Guilty of so many of these at various times - removing the emotion from the process is key. I learned a lot about myself when the National Lottery was in its infancy. My wife and I used to buy the same numbers every Saturday £1 each -a bit of fun, poor chance of winning, yes, why not ? BUT also a big concern that if we changed numbers each week then our previous numbers might come up 😂 But the irrationality of it all was highlighted one weeked when we were so busy and didn't buy our tickets. That was the most attention we'd ever paid to the Saturday night draw - watching a lottery where we didn't have tickets just in case the numbers we would have chosen came up 😅 Also have held on to funds in a SIPP waiting for them to recover 😮 - although I must say platforms are very good at showing long term performance (you really have to dig to get recent data) helping feed my bias. Hopefully I've learned to spot my own silliness 😊
Which bias do you relate to the most?
“The investor's chief problem, and even his worst enemy, is likely to be himself” Benjamin Graham.
@@ScipioAfricanus809 the technical knowledge required to invest is very basic. But investing is actually very hard, because of this 👆🏻.
Risk aversion. I'm a coward and the fear of losing my money was kept me away from investing for the longest time. Even when interest rates fell below 1%, I still opted to keep saving because at least there was no risk of losing my money in a savings account and then I learnt about inflation. 🙃
I'm too optimistic and believe in a companies story quite easily when it is covered in some article or whatever. Is there a bias for that? I have to have a rule where I don't buy anything unless I have sat on it for a day or two first. Great vid by the way!
I was very risk averse up to March 2021, then during lockdown started watching and learning about Index funds. It is scary, that I had so much ready cash roughly 50% cash 50 % in HL ISA and Sipp. Everything is with Vanguard now. I have increased my portfolio by 41% (8% is growth), the rest from cash invested. Currently got plenty of years cash for backup if anything goes wrong, so in August I have 30k maturing out of a Fixed Rate Account, so will be looking to invest that.
I already have a lot in the S&P 500, some in ESG and might look at the U.S. Equity Index Fund - Accumulation for the 30k.
I eventually want to get myself down to 2 years worth of ready cash, which I know is still probably too much.
Also always watch your videos to the end, keep up the great work
" If you can't control your emotions, you can't control your money" - Warren Buffet
👍🏻 great content!
By the way, regarding your bets examples, I think more time should have been placed on the statistical analysis. Some of these bets make lots of sense on a repeated instance, but become risky if you know the occurance of it is limited to once. For instance, a 50/50 probability of either losing 1000 or winning 5000 is a good or bad bet depending on (1) how much 1000 is of your total assets and (2) how many times your repeating the bet. If 1000 is, say, 80% of your assets and you do the bet only ONCE, the value of those 1000 far exceeds the potential benefit, because 50% of the time you will become broke. Now of you know its a bet you can repeat, say 10 times, it becomes a no-brainer because the bet is free money at this point. Therefore the probability calculations are important for the decisionmaking.
Thanks for the feedback Tommy, yes I’ve heard that from others . it seems I didn’t quite frame is all correctly.The reference point of how much money you have certainly affects decision making.
I suppose that's the beauty of an index fund. 👍
A good investor is a person who continues to regularly invest and invests in the long term . If you genuinely believe that a stock is under valued then it is always a good idea to invest in it, especially when there is a downturn in the markets. The more you buy and sell, the greater the risk of under performing but the more you buy and hold, the greater the chance of at least matching the markets the longer you hold on to the stocks. Patience is a virtue
Excelent video. Really makes you think👍
James - Yes I always watch these videos to the end... I find them really informative.
🙌🏻
Always watch to the end. Your investing/pension planning ideas have helped me revalue my investment and retirement plans. The hardest part is always finding the best way to stress test my plan
Great stuff. What are the levers that you think make the plan vulnerable, are you aiming for a high withdrawal rate?
@@JamesShack I started late in life (52) and comfortable taking high levels of risk. I think its realistic that I will retire mid 60s with a very comfortable investment pot. The main threats to the pot is (1) not investing enough over a relatively short period of time (10-15 years) and (2) choosing the wrong year to invest in. I am fortunate that the job I do is working from home and its common for workers to stay with the company even in retirement. So my strengths are that my retirement date is flexible and I have a safety net should I need to delay it by 1-5 years.
My other other lever to failure is my mortgage, again, started late and its due to end when I am 74. I am unsure of the direction I want to take with this as yet.
Things to focus on would be, like you said, longevity in your job but also in your health. Starting later is fine, you can always push things back - so long as you stay healthy for longer!
You can get Lifetime mortgages these days if over 55 which can help solve that problem.
No one know what the markets will do in the future, so now is as good as any time to invest. It's only in hindsight that we can look back and say that was "good" or "bad" but it wasn't really - just luck! That uncertainty is hard to accept but that's the truth of it. If you're still 10+ years off retirement, that's still plenty of time to see growth.
Yes - watched to the end. Always enjoy your videos.
🙌🏻
👍 60 years old UK guy just retired from teaching and doing part time work to avoid taking too much of my pension pot. I watch a lot of your videos James. Very interesting
Im a big fan James...........great stuff buddy
Cheers Will , thanks for the support!
👍👍Another way to get out of the "dont sell at a loss" mode is to view each stock/fund like a traffic jam. All the other lanes are moving faster than yours, so just switch lanes. Then switch again when the current lane stalls (obviously not immediately for investing, Id give it a few months). If you jump back to your original stock/fund in a few months time, wont you be ahead compared to not changing lanes? 👍👍
👍I watch everyone of your videos from start to finish. Very informative and thought provoking. It would be great to have a video on more exact details about the processes you mention to avoid our cognitive bad behaviours.
Hey Raj, thanks for the continued support! I'll get round to that for sure!
👍🏻 The discussion about aversion to risk of losing money reminded me of the story recently where a US men’s football team took a risky contract but the women’s team negotiated for a less risky contract.
Hi James thank you so much for putting the time and effort into these lectures, the information, insight and perspective are fantastic, it makes me wish I’d learnt more about financial education when I was younger, and the missed opportunities I could have benefited from with some simple guidance early on in my financial career.
Hey no problem! Just make sure to share!
Great stuff, James, thank you. The probability questions were unfair though. Probability only works statistically if the same bet is taken multiple times. You did not ask the question that way. You implied the listener was just making this bet once ("Which would you rather"), not multiple times. Obviously someone will only choose the chance not to lose rather than the sure lose if someone only has one stab at it. Just like most people would choose the sure win of a slightly lower amount than the gamble of a slightly higher amount, IF they only get one chance. The statistical analysis is only valid when the dice is rolled multiple times. Most of your stuff makes sense but this was utterly invalid because of the trick you played in the wording of the test questions. (I would give you a thumbs up but emoticons are a pain in the arse on this system.)
👍 Great stuff, thanks for posting!
And again, you've smashed it out the park. Quality is definitely greater than quantity. I watched to the end as always. Found this really informative and really just corroborates the fact that direct debits or standing orders into investment funds are the best option.
I think the riskiest part (for me atleast) is when it comes to the annual or semi annual re-balancing.
Could we get a video on that?
Haha! Thank you. Yes i've started to realise that it's worth slowing down and even doing 2 vids a month just so you can put more thought into the ideas! Yep, I'm gonna do one on that very soon. Some title like "Why you should sell your winners and buy your losers"
I love this! I used to sit through movies I wasn't enjoying just to get my money's worth or eat a meal I wasn't enjoying for the same reason. It's ridiculous. You're right, we need to think more clinically and cut our loses.
👍 love your content James. It's so great to have a professional, calm opinion through all the noise around finance. Keep it up!
Cheers Charlie!
👍Good stuff - thanks
🙌
These are actually good life lessons, not just with investing. One of the better videos out there. I like how you got my attention with the click bait offensive title :)
Haha glad it worked!
Agree. The videos are simple enough for the average Joe to understand and really should be taught in school mandatorily.
Excellent channel. Wish I discovered it at 26 not 36 but nevermind. I at least now have money to invest.
To the end. Your video length is spot on and engaging throughout.
Cheers Lee! Much appreciated!
👍I listen to the end because what you say is informative, interesting and fun too.
🙌🏻
Great video, I read Daniel Kahneman Thinking Fast and Slow; and Nassim Nicholas Taleb Black Swan etc...your ideas fit perfectly with their observations.
I watched to the end. I found behavior to be more important than the actual mutual fund or ETF I own. 2020 was a great example.
Yes indeed. Unfortunately this can only be learned through experience, it can’t be taught!
While I agree with what you say, I wouldn't be so harsh on people that took out their savings when everything crashed in March. Not everyone was fortunate to be employed, lots of relationships were tested, and for corporations, no one knew quite what they were in for. But yes, it's better to hold the course than take a loss.
👍 I enjoyed this video more than you did! 😀
👍 informative as ever James, always look forward to your videos.
🙌🏻
Me! I always watch to the end. Excellent video, I thought it was just me that suffered with these things 😳 Thanks for putting it in perspective ❤
it was offensive to me until you clarified that youre better with my money vs myself. im a god trader and investor and next meme follower
Haha, so I’m guessing you relate most closely to Overconfidence bias ?!
Everyone’s thinks they’re a genius in a bull market 🙂
👍 - ive recently started watching your channel, only currently 21, and once i have finished university and have a full time job, one of the first things ill be doing is getting a financial advisor. Ive been investing from 18, but there is always more to learn and im still not even close to the 100k figures. Currently making my way through 5 figures though, thanks to some good last 2 years :)
👍🏻 Great content again James - it’d be interesting to see how people’s risk aversion changes when the potential loss increases. I imagine many more people would happily risk losing $100 from a coin toss for the chance to win $150, compared with those who would accept the risk of losing $10,000 against winning $10,050 even though the expected return would be the same. And if you could toss the coin infinite times of course you’d be crazy not to accept the bet.
Hey! So typically it falls off between 1.5-2 times the loss. So $100 loss for $150 gain up to $100 for $200 gain. After 2x it really drops off. This is a test of people's attitude to risk.
You should check our Daniel Khaneman's book Thinking Fast and Slow. It goes way deeper than what i've done here and across even more biases
The reason why most people are scared of risks is that the potential gains would have a very small positive impact on your life, while a loss can have a severe negative impact on your life. Would you toss a coin to win 10 homes but if you lose you lose your home? Unless you want to be at the absolute top of wealth you should try be as safe as possible with your personal finance.
You should not take risks with money you need. Such money (emergency funds, money to buy something in the next 2 years) sits in my savings accounts as cash. So long as one is doing that, I think one can take a lot more risk with any additional money they invest.
The reference point is very important as you say. If you've only got $100 then you should not be taking the bet. Which is why everyone says you should only invest money you can afford to keep invested for 5+ years
👍I thought UA-cam gave the figures about how much of the video is watched. (So as you can see I have never done a UA-cam video).
Thanks for the good and useful info👍
👍👍 great video, though I think when you look at the money aspect I think a lot of the choices you make are based on how much that amount of money means to you. As an example, if I play with £10 bets, I'm going to be more likely to take a risk than i'f I'm playing with £100,000 bet. Emotional reactions are always difficult to control, from the sending of a stroppy email, arguing with your kids or using the car horn, there are many times when we have to put the chimp in the box and keep it under control.
👍 Absolutely brilliant! Where was this stuff when I started investing 30 years ago?
👍 watched all the way to the end. Fascinating stuff. Can you provide examples of the processes you have put in place to mitigate the biases please? 🤔
Great video, I watched to the end. I like they way you explained it.
👍👍👍👍👍...! Watched it all. 10/10 as always, James.
👍just found your channel, James, and the content is superb. Thank you for generously sharing your professional insight.
Thumbs up - another good video James.
Very interesting point on 11:10; I've seen many UA-camrs say that don't lose money until you sell (i.e. Lock in the loss); but I've never thought of it like "I wouldn't buy it at this price, so why would I hold on to it at this price?". I mean I will am going to hold on lol but you've certainly given me something to think about
👍 Love the clarity with which you explain things
Thank you for saying so!
Old but...👍 appreciating the content
Again, agree with your point about risk aversion, but not with your maths. Statistics 101, expected value is rarely, and sometimes never, the likely value - and so is meaningless. You probably meant that you might expect to gain from the bet if you could repeat it enough times. Unless you’re allowed to repeat the bet as many times as you want, a 50% chance of losing is fairly high (depending on your appetite, I guess). Suppose the bet was get a free big house or lose your own existing home - maybe your appetite is different now? “Do I really need a bigger house enough to risk losing the one I am perfectly happy with?”, for example.
Always great content this must be my 3rd time I've watched this and it won't be the last😁
👍 Thank you, James for your very informative videos. Could you also perhaps discuss/compare overpayments into a pension fund over contributing the same amount (taxed) into an ISA? Thinking about a longer-term scenario of fund growth (at least 10 years). Some pension funds do not offer the flexibility for as high growth as a general stocks+shares ISA does and perhaps it is better to pay tax up front in the smaller amount going in rather than on the larger amount being withdrawn later?
👍🏻 interesting and some good points to consider in a number of areas, not just investment.
👍 really good video. I really enjoy your style and the way you present the concepts. Thanks for sharing.
👍another great lesson- thanks James!
Good talk and I listened to the end but cannot figure out how to leave a thumbs up!
Thank you anyway!
Hi James, thanks for this. As I was watching and considering your questions, it became obvious that one-off choices are more risky than repeated ones, because repetition tends towards the more probable outcome. One coin toss is either heads or tails, but 1000 coin tosses is likely to be close to 500/500. And so it is with the bets you offered. Even if the odds are in your favour, you'd feel pretty stupid if you lost. So a trader maximising wins and minimising losses can be profitable with less than 50/50 success, though success is likely, over time to be 50/50. But a long term investor making a single deposit is vulnerable. Cost averaging, I suppose, is the simplest answer to that. Depending on the investment time frame, there is a regular option to pull out, or to grit your teeth and keep pushing money in!
Great content James, keep it up. Especially like the psychology link which I as a inexperienced investor fell foul of. Learnt my lesson, DCA all the way, no matter if I have the cash in the bank or not, DCA!
Thank you, I will!
👍 At the moment the thing I'm mostly affected by is Confirmation bias. I came here following one of your links that I thought would take me to a video on Factor investing. I'm glad I stuck around to the end of this video though.
👍 Thanks for the video!
With these cognitive errors in mind, how do we decide between the right approach: between cutting a loss on something like BTC for example vs not selling at a low point and holding on for recovery.
The question did not state i could repeat the same bet. It is a big difference flipping a coin once and 1000 times. Considering a one time bet the responses makes sense.
Watched all the way through. Great content, thanks
👍 always providing gold content.
👍always watching your videos from start to finish and like coming back and watching them again because I see I tend to forget a lot with time
Hi James....Your contents are fantastic. I feel myself lucky to subscribe to your channel....
You’re welcome !
Thanks James another great video
👍🏼 Thanks for your excellent explanations.
My pleasure!
How about a follow up video explaining the strategies you mentioned to avoid the errors you've highlighted?
Yes, that's been a popular request!
Hi James! I watched till the end. I know what you did there. 😉 That's another subtle "lesson" I just learned. Thank you.
👍 Howdy James, just stumbled on your channel and it has be refreshing! Just like you said in your ‘How to Save Your Retirement Plan in in 2022’ vid from 0.57 seconds until ~1:20 ish. Would be good to contact you in the near future. Keep up with this style of content! 👍👍
Hi Danny, no problem. You can contact me through a link in the description of my videos 👍🏻
Thanks for your good advice. We all need to hear this line of thinking over and over.
Mind Blown! Thumbs up! Wink!
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👍Thanks James, this is why I am hiring an advisor so they can give me objective advice. I know what I need to do which is to invest a big lump of cash, but I keep questioning myself.
👍 I now find Netflix binge watching even more counter productive than before.
👍Great Video! (thumbsup as requested at the end of the video! 🙃)
Always interesting content . I watch till the end , I am probably risk adverse but now I have studied and learn more about how to calculate risk etc I am getting better
Great video!thanks for the quality content. 👏👏👏
Glad you enjoy it!
Very gòd, and, yes, I am still watching till the end. Cheers.
....and, I think that when I am in the casino next, I will put it all on BLACK!
Legend buddy love your honesty and insight cheers gazza australia
👍 But I thought this data should be avaliable in the creator panel?
There is a view time anaylsis for each video.
I'm glad I sold my Orange shares earlier this year. I held onto them a decade too long.
Since selling them, and reinvesting in the S&P, that has performed relatively worse than orange in the intervening period.
But I still feel better. The glory days for that stock are definitely in the rear view mirror
I did!!!! And I agree with everything you have said!!!
*Confirmation bias is powerful*
👍Thats a very informative video, can yourecommend a book to read based on cognitives biases. Thanks!
Great content very well presented
👍- Another great video. Thanks James
Another excellent video...eye opener!
Sent your last video to a friend and he instantly subscribed 👍🏻
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👍 Great stuff. Thank you.
👍I'm biased I know, but that was great content thanks James
👍 Hi James. Thank you for the content and taking the time to make your videos. I learn something new with every one I've watched so far.
👍 Thanks for the lesson
Hello from Greece! Very nice video! 👍
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Great video James - i rewatch it often 👍
To the end - great video. Really good fun.
Glad you liked it!
👍 always try to watch till the end, successful 90% of the time
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'In the cut and thrust of financial life, always back self-interest, because you know it's trying!' A quote by the great Malcolm Turnbull Ex-Australian P.M.
And yes I could write a book on Loss Aversion theory - ps studies suggest it's about 2 to 3 times more pain of losing something over joy of gaining something eg say a £50 note in your suit trousers !
Great points!
Watched it till the end. Great video as usual.
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Yes a very very great tactic to discipline the own emotions!
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Guilty of so many of these at various times - removing the emotion from the process is key.
I learned a lot about myself when the National Lottery was in its infancy. My wife and I used to buy the same numbers every Saturday £1 each -a bit of fun, poor chance of winning, yes, why not ? BUT also a big concern that if we changed numbers each week then our previous numbers might come up 😂
But the irrationality of it all was highlighted one weeked when we were so busy and didn't buy our tickets. That was the most attention we'd ever paid to the Saturday night draw - watching a lottery where we didn't have tickets just in case the numbers we would have chosen came up 😅
Also have held on to funds in a SIPP waiting for them to recover 😮 - although I must say platforms are very good at showing long term performance (you really have to dig to get recent data) helping feed my bias.
Hopefully I've learned to spot my own silliness 😊
I watched to the end James!
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Your content is excellent!
👍 Thank you for your videos!
Really good and intriguing stuff. thumbs up!
Very interesting topic and why I take a hands off approach to investing. I watched to the end 👍
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👍 Great video James!