It is convenient to assume that we behave according to predictable models, but that's not always the case. Emotions and many behavioral biases can influence our investment and planning decisions and how we react to markets.
Beginning the week of September 25, we began releasing new podcasts featuring our behavioral finance specialist for CIO Americas, Wealth Management, Svetlana Gherzi—as well as leading academics in the field. We will post the links on this site as they become available.
Podcast #1: This podcast series interviews leading academics in the behavioral finance field and is aimed at educating investors on important topics related to behavioral finance. These include discussions on learning and recognizing biases, emotion regulation, risk, planning for cognitive decline, household finance, how investors' behavior impacts financial markets on a large scale and what investors should pay attention to - Click to listen
Podcast #2: This podcast explores the impact of stress on investment decisions. Professor Mark Fenton-O'Creevy discusses the role emotions play in rational decision-making. His academic research explains how anxiety affects humans and animals alike, as noted in the performance of professional traders, and the similar behaviors of hermit crabs and rats. – Click to listen
Podcast #3: Practitioner and CIO of the U.S. Behavioral Finance Equity Group for J.P. Morgan Asset Management, Denis Ruhl, joins us on this week's podcast to discuss overconfidence bias, the anchoring effect, the representative bias and their impact on investor's behavior and how mass psychology affects financial markets. Ruhl emphasizes the importance of being able to understand and monitor these biases when making investment decisions and provides recommendations in order to do so. – Click to listen
Podcast #4: Professor Chris Olivola from the Tepper School of Business at Carnegie Mellon University joins us on this week's podcast to discuss taxes and individual's behavior. It's no secret that people dislike taxes, but tax aversion can often lead to sub-optimal strategies. Chris explains that from a policy standpoint, it's important to highlight that taxes are being used in ways investors care about, and to avoid the word tax if legally possible. – Click to listen
Podcast #5: Professor and author Victor Ricciardi joins us on this podcast to discuss the psychology of risk and how it relates to financial planning decisions. He also mentions common behavioral biases and mistakes. – Click to listen
Podcast #6: Professor Mark Fenton-O'Creevy discusses the extent to which emotions should be involved in the investment process. We often advise clients to avoid emotion in decision-making, but following your emotions can sometimes be a good thing. He offers strategies that can improve our investment decisions. – Click to listen
Podcast #7: Professor Julie Nelson joins us to discuss gender and risk preferences. She explains how the publication process, as well as individuals' own confirmation bias, can lead to stereotypes. She suggests taking literature on this subject with a grain of salt, and emphasizes that sex isn't a good indicator of risk tolerance. – Click to listen
Podcast #8: Professor Abigail Sussman from the Booth School of Business at the University of Chicago joins us on this week's podcast to discuss budgeting and spending. Investors are always encouraged to save, yet sometimes spending is actually the optimal strategy. Spending can help to maximize total net worth, as long as investors are budgeting and actively avoiding behavioral biases. – Click to listen
Podcast #9: Professor Terry Odean from the Haas School of Business at the University of California, Berkeley joins us on our inaugural Behavioral Finance Podcast to discuss how to plan and prepare for cognitive decline. He shares his own personal experience with the subject, and offers advice to help avoid worst-case scenarios. – Click to listen
Podcast #10: Svetlana Gherzi concludes this podcast series by answering questions regarding risk: how not to measure it and why investors buy things that are on sale but not cheap investments. Also, many of you asked, so she provides her book recommendations. – Click to listen