Why I Will Always Be A Better Investor Than You

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👉🏻 Looking for help with Financial Planning?
I am a Chartered Wealth Manager and Partner in a financial planning practice based in the UK. If you would like to find out more about working with us, please follow this link: go.novawm.com/getintouch
This video is all about the fascinating world or behavioral finance. Learn why I will always be a better investor than you, and what you can do to be more like me.
In this video we cover:
- Cognitive Bias
- Anchoring
- Framing
- Risk Aversion
Emotional Bias
- Overconfidence bias
- Regret Aversion
If you found this video interesting, I highly recommend reading Daniel Kahneman’s fantastic book Thinking Fast & Slow:
www.amazon.co.uk/Thinking-Fas...
DISCLAIMER:
This channel is for education purposes only and does not constitute financial advice - James is not responsible for investment actions taken by viewers. Please seek out a regulated advisor if you require assistance (whilst James is a financial adviser, he does not provide advice through this RU-vid Channel, which is not affiliated with his employer).
James Shack™ property of James Shackell
Copyright © James Shackell 2021. All rights reserved.
The author asserts their moral right under the Copyright, Designs and Patents Act 1988 to be identified as the author of this channel and any video published on it.

Опубликовано:

5 авг 2024

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Комментарии : 1,1 тыс.

@JamesShack 3 года назад

Which bias do you relate to the most?

@ScipioAfricanus809 3 года назад

“The investor's chief problem, and even his worst enemy, is likely to be himself” Benjamin Graham.

@JamesShack 3 года назад

@@ScipioAfricanus809 the technical knowledge required to invest is very basic. But investing is actually very hard, because of this 👆🏻.

@seraho 3 года назад

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. 🙃

@garethgazz9332 3 года назад

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!

@jamesc328 3 года назад

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

@javi7602 3 года назад

" If you can't control your emotions, you can't control your money" - Warren Buffet

@davidthomas-ot4cl 2 года назад

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.

@michaelnorman6176 3 года назад

James - Yes I always watch these videos to the end... I find them really informative.

@JamesShack 3 года назад

🙌🏻

@charliecooper8234 3 года назад

👍 love your content James. It's so great to have a professional, calm opinion through all the noise around finance. Keep it up!

@JamesShack 3 года назад

Cheers Charlie!

@judokasniper 3 года назад

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.

@JamesShack 3 года назад

Hey no problem! Just make sure to share!

@jam99 2 года назад

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.)

@Brownbeltforever 2 года назад

Thanks for your good advice. We all need to hear this line of thinking over and over.

@roblowry9457 3 года назад

Yes - watched to the end. Always enjoy your videos.

@JamesShack 3 года назад

🙌🏻

@OldJoeAce 3 года назад

👍I listen to the end because what you say is informative, interesting and fun too.

@JamesShack 3 года назад

🙌🏻

@HamperedPath34 3 года назад

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?

@JamesShack 3 года назад

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"

@claralexandra 2 года назад

Hi James! I watched till the end. I know what you did there. 😉 That's another subtle "lesson" I just learned. Thank you.

@williamwhitla6406 2 года назад

👍 big thumbs up...didn't want it to end. Great to see a good uk investment channel. Keep up the good work...feel like I need to see a financial planner now lol

@rajlakhani2958 3 года назад

👍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.

@JamesShack 3 года назад

Hey Raj, thanks for the continued support! I'll get round to that for sure!

@OfficialTommyEch 3 года назад

👍🏻 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.

@JamesShack 3 года назад

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.

@Kefford666 2 года назад

👍🏻 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.

@paulhongkong5625 3 года назад

Another great episode from James, and of course, I watched until the end 👍

@brassj67 3 года назад

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

@tracythompson4024 3 года назад

👍 informative as ever James, always look forward to your videos.

@JamesShack 3 года назад

🙌🏻

@eddied112 2 года назад

Another great video, James - dealing with an aspect of investing that isn't covered as much as it should be. Love the provocative title and yes, I watched all the way through to the end - it would be rude not to 🙂

Год назад

👍 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.

@ArcanePath360 3 года назад

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 :)

@JamesShack 3 года назад

Haha glad it worked!

@NoName-ql1wk 2 года назад

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.

@willlsmith8063 3 года назад

Im a big fan James...........great stuff buddy

@JamesShack 3 года назад

Cheers Will , thanks for the support!

@jpturner171 3 года назад

I feel like you’re speaking directly to me thank you very much for your education!

@JamesShack 3 года назад

🙌

@atul9380 3 года назад

Really enjoyed listening to how we can be our own worst enemy and these cognitive biases apply to so much that we choose to watch online. Thanks James 👍🏽

@JamesShack 3 года назад

🙌

@daveschmarder-1950 3 года назад

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.

@JamesShack 3 года назад

Yes indeed. Unfortunately this can only be learned through experience, it can’t be taught!

@johnanth 3 года назад

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.

@markaw9243 3 года назад

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

@JamesShack 3 года назад

Haha, so I’m guessing you relate most closely to Overconfidence bias ?!

@FoxtrotWTA 3 года назад

Everyone’s thinks they’re a genius in a bull market 🙂

@yogabija Год назад

Great video, I watched to the end. I like they way you explained it.

@markwaite6463 Год назад

👍just found your channel, James, and the content is superb. Thank you for generously sharing your professional insight.

@FrazerBriggs 3 года назад

👍🏻 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.

@JamesShack 3 года назад

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

@pim4798 3 года назад

Another great 'hit the nail on the head' video. Thank you!

@The-TW 3 года назад

👍🏽 always watching to the end. Very informative as always James

@JamesShack 3 года назад

🙌🏻

@oscarpicazo808 11 месяцев назад

👍 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.

@lesleyquigg9756 3 года назад

Great video…. I had never heard of anchoring, now I can totally see clearly what it is. I was looking at a DFS sofa…..anchoring right there!!!!

@loungeranger Год назад

👍Love your content James. Comprehensive, summarising the academic aspects really well, as much as needed to support a practical approach to investing. My favourite financial commentator with a middle approach between Ben Felix and someone like Rob Berger.

@JamesShack Год назад

Thank you, very kind words!

@paull285 3 года назад

I could have listened for another hour- so many truths, we all fall into the traps but great when someone takes the time to tell you where they are 👍

@pieterv6984 Год назад

Confronting. Good stuff. I now find out you studied Psychology. Very usefull. That´s why you are able to explain the behavioural side so well. Love the content

@user-do6jp1zg5r Год назад

👍👍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? 👍👍

@anacostache8235 3 года назад

Great video again James, loving the content! Not gonna lie, whenever I watch your videos I get a bit distracted by the background, your house looks gorgeous! Made it to the end but I can't find a thumbs-up emoji :)

@JamesShack 3 года назад

Haha thank you! And thank you for the support!

@Indowaindowa Год назад

Great video, I read Daniel Kahneman Thinking Fast and Slow; and Nassim Nicholas Taleb Black Swan etc...your ideas fit perfectly with their observations.

@pjani14 3 года назад

Nice one James - subbed and watched to the end.

@JamesShack 3 года назад

🙌🏻

@King_Harrold 3 года назад

To the end. Your video length is spot on and engaging throughout.

@JamesShack 3 года назад

Cheers Lee! Much appreciated!

@jamesgray853 3 года назад

Watched all your videos and this one is by far the best. Fascinating! I’ve always managed my own investments but since watching your videos I now invest 70% in vanguard 100 life strategy and 30% in crypto. I struggle with my emotions when it comes to my money so the life strategy fund just takes that away

@JamesShack 3 года назад

Interesting! Yes, I think everyone starts of really interested, and we all have a lot of overconfidence, but gradually we start to lose interest and realise that there's a lot we don't know... so but to just stuff it in an index fund.

@charlesblake2121 2 года назад

👍🏽 Useful content, with great visual representation as always. Keep it up

@saras4472 3 года назад

Always watching til the end, so informative! 👍👍👍

@JamesShack 3 года назад

🙌🏻

@michalrogalski4836 3 года назад

👍 Thank you for another great video, James. You have one of the most engaging and informative channels on RU-vid. Always watching til the end.

@JamesShack 3 года назад

🙌

@KalpPatel Год назад

Great video James - i rewatch it often 👍

@sueroscoe3589 3 года назад

👍Nice take on the realities of investing for general folk. Good delivery James.. Kept my interest!

@JamesShack 3 года назад

🙌

@EcommerceGold 3 года назад

Very interesting topic and why I take a hands off approach to investing. I watched to the end 👍

@JamesShack 3 года назад

🙌

@arunmenon6513 3 года назад

👍 love it, the argument of EV is also so relevant also in matched betting where people go through the same emotions as financial investing.

@JamesShack 3 года назад

Yes indeed!

@marianelavelasquez9696 3 года назад

I love your videos James. Thank you 😍

@JamesShack 3 года назад

🙌

@RandomCyclist Год назад

👍🏻 interesting and some good points to consider in a number of areas, not just investment.

@Marco-qc9yu 3 года назад

Great video. I always watch my favourite channels to the end cause runtime and engagement is important to channel success. 👌👍

@JamesShack 3 года назад

Ah cheers mate! I didn't realise people did that!

@alunwilliams9202 2 года назад

Definitely agree that we get emotionally attached to our personal actions and whilst none of us like losing money/value in our investments third party managing it for us should give us more comfort they have a proper and measured long term view. More difficult if you are trying to grow your wealth more quickly due to age or circumstances. Watched to the end as usual. 👍

@wealthelife Год назад

Of course the virtue of third party disinterested/impartial money management has to be weighed against the risk of that third party not acting in our best interests. Numerous examples of financial advisers ripping off rich Hollywood clients, the examples of dodgy financial advisors succumbing to conflict of interest ethical failings provided in the Australian Financial Services Royal Commission etc. highlight that outsourcing financial decision making isn't risk-free either (and I say this as a registered Financial Advisor). I'm always amazed at the number of people who hand over their finances to a 'professional' and then don't do any due diligence in terms of verifying the advisor/managers bona fides (eg. en.wikipedia.org/wiki/Melissa_Caddick) or bothering to understand what investments their advisor is making for them, and how the actual performance compares to what was to be expected when the investment decision was made.

@greatdara 2 года назад

👍 great content very well delivered, thanks James.

@manishrana6 3 года назад

Brilliant, I really love the psychological aspect of investing..plz make more of these..keep up the good work

@JamesShack 3 года назад

I will try!

@johnthompson3530 2 года назад

Yet again another great video. Food for thought!!

2 года назад

👍🏻 Great video as usual! That's why many investors and business people study human evolution, culture and so on: besides being very interesting, they equip you with more tools to avoid these and other biases. Thanks for sharing!

@gusdogbrownlab435 Год назад

👍 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

@simbals 2 года назад

👍 really good video. I really enjoy your style and the way you present the concepts. Thanks for sharing.

@mrcmdjd57 3 года назад

Good talk and I listened to the end but cannot figure out how to leave a thumbs up!

@JamesShack 3 года назад

Thank you anyway!

@GeorgeHashesThoughts 3 года назад

Always watching to the end … most enlightening for us amateurs …good job …

@JamesShack 3 года назад

Thanks George!

@sevensorrows2595 2 года назад

👍👍👍👍👍...! Watched it all. 10/10 as always, James.

@balamurugans9204 3 года назад

Hi James....Your contents are fantastic. I feel myself lucky to subscribe to your channel....

@JamesShack 3 года назад

You’re welcome !

@jamesdarby86 3 года назад

Thumbs up - another good video James. Very interesting point on 11:10; I've seen many RU-vidrs 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

@seraho 3 года назад

👍🏾 Great video as always. You should look into how financial regulators have used cognitive biases and nudge theory to develop regulations like KIID to help minimise/correct the effect of biases in investors decision making. Also, professional financial advisors, are very susceptible to overconfidence bias and herding. Just look at what happened with the global financial crisis. Most were either overconfident in their assessments of structured products, ignoring the risks, or were just following what other financial institutions were doing to avoid missing out.

@JamesShack 3 года назад

Oh yes financial professionals fall foul of this stuff too... and they have lots of conflicts of interest!

@UKGeezer Год назад

👍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.

@Oneofakind123 3 года назад

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.

@MrPW2009 Год назад

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!

@rosemarywalker6786 3 года назад

Interesting video, I enjoyed and agreed with your insights- I watched to the end, I always do with your videos James 😊

@JamesShack 3 года назад

🙌

@Christian-eh8iu 2 года назад

Excelent video. Really makes you think👍

@MaroonedInDub Год назад

👍I thought RU-vid gave the figures about how much of the video is watched. (So as you can see I have never done a RU-vid video). Thanks for the good and useful info👍

@anthonyjanes9973 Год назад

Thanks James another great video

@ianpiper6357 2 года назад

👍 Love the clarity with which you explain things

@JamesShack 2 года назад

Thank you for saying so!

@doc6667 2 года назад

Another excellent video...eye opener!

@algheroman6476 3 года назад

Watched it till the end. Great video as usual.

@JamesShack 3 года назад

🙌🏻

@gingermattb 2 года назад

👍 More excellent content - thanks James. Your pension calculator sheet is superb by the way, many thanks for that.

@JamesShack 2 года назад

Glad you like it!

@MisterB88 2 года назад

👍 Thank you for your videos!

@prodavnicayugo 9 месяцев назад

👍another great lesson- thanks James!

@ScipioAfricanus809 3 года назад

I am interested in a career change and going into financial planning, is there is a particular qualification you recommend for someone wanting a start in the field? Thanks, your videos are fantastic 👍

@JamesShack 3 года назад

Thanks great to hear! These are the exams you need to get started www.cii.co.uk/learning/qualifications/diploma-in-regulated-financial-planning-qualification/# If you can get 2-3 of these under your belt you should be able to get a junior planner role. Lots of demand in the space right now as most advisers are old and retiring.

@marks5305 3 года назад

Another good video. Thanks for the informative and detailed videos that you produce. 👍

@JamesShack 3 года назад

Cheers Mark!

@johncooper8040 3 года назад

Really good and intriguing stuff. thumbs up!

@MaxTalks 3 года назад

Would put a thumbs up but laptop doesnt let me! Interesting concepts though James! Set and forget is my strategy to stop these biases :)

@JamesShack 3 года назад

🙌🏻

@joshalward9803 3 года назад

👍🏻fascinating stuff as usual, James. I enjoyed you delving deeper into the psychological aspects. Thanks for the content.

@JamesShack 3 года назад

🙌

@lakdahulara Год назад

Your content is excellent!

@paulevans2246 Год назад

👍 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? 🤔

@spartacusptolemaida 2 года назад

👍 excellent content James. This is what they should be teaching at schools, Wealth management.

@JohnSmith-ch9lp 2 года назад

👍 I enjoyed this video more than you did! 😀

@bazwan6396 3 года назад

Watched to the end, and have concluded I am still an emotional investor with the savannah mindset. I am working on it but it has been built up over 50+ years, so am finding it very difficult.

@JamesShack 3 года назад

You'll get there in the end!

@imz4 2 года назад

👍 Great stuff. Thank you.

@Peter4253 Год назад

👍 Great stuff, thanks for posting!

@joanaggil 3 года назад

I did!!!! And I agree with everything you have said!!!

@bioversity8584 Год назад

👍 new subscriber. Love the content. Just starting my journey so all of this helps a lot.

@lucre87 3 года назад

Watched to the end! Great video :-)

@JamesShack 3 года назад

🙌🏻

@rufick 2 года назад

👍🏻fascinating insight into how our brains make money related decisions. Thanks for the great content James, keep it coming!

@spacebadger99 2 года назад

👍 Thanks for the lesson

@leightonharrison2328 2 года назад

👍just subscribed, going through all your videos, bit by bit. Thanks for your passion!

@JamesShack 2 года назад

Welcome!

@gazzatatts4228 11 месяцев назад

Legend buddy love your honesty and insight cheers gazza australia

@ireneGT0621 3 года назад

Thanks James!

@JamesShack 3 года назад

🙌

@faceonnailsdonehairdid 3 года назад

👍🏽Thanks for sharing this insight. It's really interesting how the different scenarios with the same probability can lead to different results because we react to them differently, leading to two completely irrational decisions. It'll be good to have a flowchart for decision making, think it's something that we all need, to avoid making irrational decisions with our investments and subsequently, stupid mistakes.

@JamesShack 3 года назад

Yes making flow charts can definitely help... if you're got the time!