Ted Richards

Behavioral economists call it choice architecture.

And I think that can be great.

I think so much of what I talk about is investing.

I think you really need to make a decision as to your own investment philosophy.

Are you...

going to be passive, look at the evidence and set up some rules to be your investment philosophy.

Or...

If you do think that you can be a good stock picker, are you prepared to do the due diligence?

Are you prepared to acknowledge what is inside and outside of your circle of competence, do pre-mortems, post-mortems, and actually not try and be everything?

Because I think I see that so commonly with some investors that,

They're smart people and they'll invest in Australian banks, they'll invest in miners overseas, they'll invest in tech stocks in the US, they'll invest in up and coming companies in China and India.

It is very hard.

Complicated portfolio where on the other side of the trade, you've got professionals.

So I guess that's the last point that I'd like to make.

How can you protect yourself from yourself?

And that is what is inside your circle of competence and what is outside because some people may think that they've got a very large circle of competence.

I think Howard Marks talks about it's not how big your circle is but actually –

knowing what is inside and what is outside.

And for most people that are busy, that may have a family, they work full time, they catch up with friends and family on the weekend, it is very hard to think that you know something that most professionals don't know on the other side of the trade when it's be it about Woolworths and West Farmers or a bank.

So I probably rambled on a bit there.