🧠 Mental games of investing: FOMO & letting go of money mistakes
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What are the mental games of investing discussed in this episode?
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So don't act on the information until you've spoken with your financial advisor. You'll find our full disclosure, disclaimer and link to our financial services guide in the show notes. Well, here we are, Kate. Welcome to the show. Today we're talking about, what are we talking about? Mental games?
Mental games of investing. It was actually a listener's suggestion. The fear of missing out, dealing with regrets. If you've made financial mistakes, how do you actually get over them and move on and keep investing for your future and just sort of letting go of things and thinking about the future?
Cool.
A whole heap of different topics that I've really just intertwined in one episode.
Yep. So if you're into psychology, money, investing, this is the one for you. This episode is not sponsored by Lucy Liu Kitchen in Melbourne. We're going to lunch after this with a fellow podcaster, Kate. And if you do have time, you get to Melbourne and you're in the CBD, Lucy Liu, fantastic Asian fusion. Get there. It's a lovely spot. Okay. So I'm going to say, you know, I think I'm really smart. Does that make me good at investing?
So investing is really about how you manage yourself and your emotions rather than how smart you are. Because I don't know if this is something I made up, but investing is an EQ game, not an IQ game. So it's more about your emotional intelligence, your psychology, your behavioral biases, and your understanding of them rather than how smart you are. Because as we've discussed in previous episodes, you can put together a long-term ETF portfolio fairly simply. You don't need to have a PhD in economics or be watching the investment news every day to do this?
Yeah. I've met a lot of PhDs and CFA charterholders and even doctors that become investors. And that is, in my experience, not a predictor of their investment performance. In investing, we commonly accept that there are maybe three edges or ways that you can do better than average. One of them is to do with access to information. The second one is you're a better analyst. And the third one is you have the behavior. And if you think about the first two, information, basically everyone has access to the same information nowadays. That edge is pretty much gone. Analysis, if you think you can out-analyze someone, well, there's computers for that, so that's another hard thing to do. It's possible if you have better insights, you can be a better analyst, but it is very difficult.
So that leaves us with one thing. If we want to do well, behavior plays a big role. And I think if you did coin that phrase, fantastic, it's very similar to Morgan Housel's, which is being good with money has less to do with how smart you are, but more to do with how you behave.
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