Meet the Podcaster Who Intersects Money, Mind, and Meaning with a Little Bit of Fun, Too
A lot of people think about money. But are they thinking about it in ways that help them make the best decisions possible, act on them and, as important, not get in their own way? It’s very common, after all, to make sub-optimal financial decisions based on our own biases, personal history and heat of the moment. Enter the new podcast series, Standard Deviations. Standard Deviations is your audio guide to money, mind and meaning. It explores how we earn, spend, think, act and…be.
Guiding us through this wilderness is Daniel Crosby, PhD. Daniel is a behavioral psychologist and founder of Nocturne Capital, an investment firm that specializes in translating complex investment principles into ideas that are accessible to everyone. Through weekly episodes, whether he’s interviewing a fellow financial thought-leader or discussing the psychology of diversification, he helps to reinvent how people think about money.
In anticipation of the series, we asked Daniel about his work – particularly about how behavioral finance can help Standard Deviations listeners improve their own lives through greater awareness of the financial decisions, big or small.
As a behavioral finance expert, you merge the worlds of psychology and personal investing. How did you get started?
I’m the son of a financial advisor, and so I grew up steeped in the world of talking about saving, investing and compounding. In college, I fell in love with psychology and decided that nothing could be more important or fulfilling than studying human behavior. So, I went on to get BS and PhD degrees in psychology but discovered along the way that the heaviness of daily counseling was too much for me. I decided to look for non-clinical applications of psychology and found my way, quite naturally, back to the topic that had been the source of so many childhood discussions.
Why do you think your work resonates with people?
I’m as at home presenting lofty academic ideas to large groups of people as I am talking about a college football game back home in Alabama. I’m blessed that I get to explore the fascinating world of human behavior with an eye to teaching it to others in ways that directly improve their lives. I think that my work resonates because it combines the rigor of the academic conference with the informality of the college football game. People want to learn and grow, but don’t want to be condescended to by a professor, and that’s where Standard Deviations comes in.
What can listeners discover on Standard Deviations that they won’t find anywhere else?
I want Standard Deviations to be informative, funny and to directly impact your day. If I’m doing my job, you will leave each episode both enlightened by new ideas and tasked with concretely applying them throughout that week. I want you to be able to listen to a topic that interests you and gets you closer to your dreams than when you started.
In thinking about helping people to become more financially confident, what behaviors do you see people engage in that inhibit them?
In my new book, The Behavioral Investor, I pinpoint the four primary psychological biases that lead us to make poor financial decisions.
- Ego: This is our tendency to be overconfident. We believe that we will win the lottery, but that others will get divorced. This causes us to under-prepare for the worst.
- Emotion: Life is complicated and one of the primary means by which we seek to simplify it is by asking an easier question. Instead of asking if something is risky, which is hard to ascertain, we ask if it’s fun. People think that boating is safe because it’s fun, and investing is risky because it’s boring, but the exact opposite is true.
- Attention: This is our tendency to confuse things that are vivid with things that are probable. For instance, 50 times as many people have died this year taking selfies as have been injured by shark attacks, but we are scared of sharks and not cell phones. Likewise, investors tend to worry about rare, but high-profile events, like the Great Recession. Then they tend to ignore things that have a much more material impact on their financial goals, like automating savings and watching fees.
- Conservatism: This speaks to our preference for the status quo and familiarity. We often just settle for whatever is close or familiar. This leads us to make a number of predictable errors like avoiding foreign investments, being overweight in the industry in which we work and failing to rebalance.
What are some behaviors that people can adopt to make their investments more productive?
I think the key is in understanding how prone you are to the four primary biases mentioned above and then working with a financial professional to avoid the most common traps.
Who are your biggest influences in your work, including with this podcast?
My Mount Rushmore of great behavioral thinkers would include Viktor Frankl, Daniel Kahneman, Søren Kierkegaard and Seth Klarman. Frankl brings the heart, Kahneman adds the applied curiosity, Kierkegaard gives you pathos and Klarman shows you how to make money with the combination of all the other parts. Standard Deviations is all about knowing yourself to grow your wealth, and you can’t have the one without the other.
Want to get your investing behavior to match your financial ambitions? Check out the Standard Deviations podcast. You can subscribe to Standard Deviations on Stitcher, Apple Podcasts or Soundcloud.
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2020-112687 Exp. 12/2022