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STANLEY H. TEITELBAUM | Psychologist & Author

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A Psychologist's Guide to Overcoming Self-Defeating Patterns in Stock Market Investing Dr Stanley Teitelbaum

Greed, fear, euphoria, despair, over-confidence and regret. These are the greatest emotional obstacles in the way of stock market investing according to my guest Dr Stanley Teitelbaum.

In this episode we discussed the range of emotions that contribute to our poor investing outcomes, the negative thoughts that we experience and the steps to take to minimise their impact.

Stanley provided a great list of questions to ask a financial advisor:

  1. Does he or she invest his own money in the stocks or funds that he recommends.
  2. What stocks and funds do they own?
  3. Do they get paid to promote or select a particular investment product.
  4. How long do clients typically stay with them?
  5. What are the fees, the transaction costs and hidden charges that are applicable to my account. 
  6. Ask for three references that you could contact that they have worked with.
  7. Is there any history of client complaints or regulatory actions? 
  8. What is their investment philosophy and strategy for success? 

You can pose these questions, and it might feel like you're being a little presumptive or pushy, but they are all legitimate questions.

As a consumer, as a potential investor, who is looking to hire a financial advisor, you have every right to ask and pursue these questions to your own satisfaction

"A foolish faith in authority is the worst enemy of the truth" 

Albert Einstein

"We all have roadblocks that emanate from our personality issues, which can interfere with successful investing in the stock market. Buying high and selling low, the herding instinct, and searching for the next guru are among the prime examples of this phenomenon. Too many of us have internalized negative attitudes about ourselves as inadequate when it comes to managing our investments. Demystifying and overcoming these personal obstacles, along with acquiring and implementing several well-tested strategies can facilitate a greater degree of success. The goal is to transform our self-defeating investing patterns into more productive approaches. Knowledge is power, and by gaining greater recognition into their principles, investors can expect to generate more positive results."

“The four most common self-defeating patterns are: 1 buying high and selling low, 2 the herd effect, which means following the herd and following up what you think or see everybody else is doing and then going along with that and related to that. And related to that is what we call FOMO, the fear of missing out: if everyone else is buying something and it seems to be going up, then what a jerk I would be if I didn't do that also. So, I'm afraid, I have fear of missing out, I don't want to leave the party, I want to join the party. So that's FOMO. And the 3rd self-defeating pattern is looking for the guru and not recognizing the fallibility of many gurus. And the 4th self-defeating prominent factor is staying too long with an underperforming financial advisor.”

Stanley H. Teitelbaum, PhD is a clinical psychologist and psychoanalyst. His new book is SMART MONEY: A Psychologist's Guide To Overcoming Self-Defeating Patterns In Stock Market Investing. The book addresses how to identify and overcome emotional roadblocks, blind spots, and errors in judgment that interfere with profitable investing, and how to develop greater trust in one’s ability to navigate investments.

TRANSCRIPT FOLLOWS AFTER THIS BRIEF MESSAGE

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Smart Money - A Psychologist's Guide to Overcoming Self-Defeating Patterns in Stock Market Investing

EPISODE TRANSCRIPT

Stanley (5s):

The emotions that often seem to influence or enter into the picture and influence the choices and decisions that investors make are greed, fear, euphoria, despair, overconfidence and regret. That's a whole cluster of emotions that can influence, that do influence how people choose to pick what stocks they're going to buy or what they're going to sell and when and how they're going to do that.

Phil (35s):

Hi and welcome back to Stocks for Beginners. I'm Phil Muscatello. Do you suffer from uncertainty, anxiety, fear, doubt and other forms of self-defeatism, or are you excited by the action of the Wall Street casino and addicted to chasing rainbows? My guest today is the author of a book that addresses how to identify and overcome emotional roadblocks, blind spots and errors in judgment that interfere with profitable investing. Hello, Stanley.

Stanley (1m 4s):

Hi. Thank you, Phil.

Phil (1m 5s):

Dr. Stanley Teitelbaum is a clinical psychologist and psychoanalyst who, for more than 35 years, has helped clients examine and overcome their emotional problems and interpersonal conflicts. He's appeared on Good Morning America, Nightline, 20/20 and Court TV and was a regular guest blogger on The Huffington Post. His latest book is "Smart Money: A Psychologist's Guide to Overcoming Self-defeating Patterns in Stock Market Investing". So what was it that first inspired you to write this book?

Stanley (1m 35s):

Well, I've been in practice as a psychologist for a number of decades and I've treated a lot of people who have had significant self-defeating patterns, particularly in their personal relationships. And so I'm kind of an expert in working with self-defeating patterns. So that was one factor, in many cases like that in my experience with my practice, people making poor decisions in their personal relationships and getting to understand what prompted them to use poor judgment instead of good judgment. Along with that, I came to recognize that we also have a relationship with money and that's something that I wanted to explore in this book.

Stanley (2m 21s):

And thirdly, and perhaps most importantly, there was my own stock market investing odyssey in which involves how I learned from my own mistakes, of which they were many along the way. And that prompted me to go forward and convey all this so that other people could have the benefit of my lapses in judgment.

Phil (2m 43s):

So you personally suffered from some of the self-defeating and self-sabotaging behavior that you're now identifying in the book, is that correct?

Stanley (2m 52s):

That is correct, but it's been a wonderful learning process and that's what I most hope to be able to convey to your listeners.

Phil (2m 60s):

Okay. So let's start off by talking about the Cassandra syndrome, which is one of the chapter headings. And in Greek mythology, Cassandra was cursed to add her true prophecies but never to be believed.

Stanley (3m 14s):

Apollo was the king who, kind of, fell in love with Cassandra was so beautiful. And because of that, he gave her the power to make prophecies to foretell the future. Unfortunately for him, Cassandra did not return his affection, which was what we call the significant narcissistic injury that offended him very much. And in order to take his revenge on her, he took the capacity to foretell the future. He took that away from her and to create that no one should ever believe her again about anything she said. So people all but believed her, but she often continued to have significant prophecies.

Stanley (3m 58s):

And people didn't listen to them because of the decree by the king, Apollo, that you should never listened to her again. As it applies to the stock market, it refers to the tendency of investors to disbelieve or dismiss valid warning signals of the direction of the stock market. Like, for example, what's happening right now in the stock market. There are indications that things are really not going well, that we're bordering on, or already in the correction territory, which means that the direction is downward rather than upward. And being aware of that is important because that informs us as to the direction and then we have to make a decision about what we want to do about that.

Stanley (4m 41s):

And that applies to all investors: seasoned investors and brand new investors as well. There was another philosopher by the name of Santayana who is known to have said people who don't remember the past and especially the past mistakes, they are doomed to repeat them. So in my view, it's really important to become familiar with the history of the stock market and stock market performance, which helps you to guide yourself in how you're going to proceed with your own investments.

Phil (5m 17s):

So investors in general seem to suffer from extremes of optimism and pessimism. How can people avoid it, becoming a rollercoaster ride for them emotionally and psychologically.

Stanley (5m 28s):

I'm going to give you a few quotes along the way. One of my favorite quotes comes from Warren Buffet, who everyone has heard about, you know, he's called the Sage Omaha and he's now in his nineties and he's one of the best stock market people ever he's known to have one said the greatest enemies of the equity investor or expenses and emotions. So expenses have to do with the costs that occur in trading and the costs or incremental when you're dealing with a financial advisor versus when you're trying to do it more on your role. And that's a topic probably that we can get to a little bit, a little bit later, but the emotional costs are also very prominent and very prevalent.

Stanley (6m 13s):

So the emotions that often seem to influence or enter into the picture and influence the choices and decisions that investors make, or greed, fear, euphoria, despair, overconfidence, and regret. That's a whole cluster of emotions that can influence that do influence how people choose to pick what stocks they're going to buy or what they're going to sell and when and how they're going to do that. And again, that applies across the board to seasoned investors and or investors as well. Another factor in this category, it has to do with people need to try to determine their risk tolerance versus risk aversion.

Stanley (7m 2s):

When you ask people, what is your risk tolerance? How much do you feel you can tolerate losses? Because people usually go forward in their stock market investing with an expectation that this is going to be a joy ride that it's going to go forward and continue to go forward. And when you ask people, what is your risk tolerance? How much do you feel you can lose? Generally speaking, there are studies that have shown people, tend to exaggerate the level of risk tolerance that the reality is that they are not in a position to lose as much as they're saying that they might be able to risk. So that has to be reined in, in some way.

Stanley (7m 42s):

And it's especially true for new investors who need to really have an honest appraisal with themselves as to how much they can invest, how much they could afford to invest. And the first and perhaps one of the most important rules in stock market investing is the rule of cut your losses in real estate. We say it's location, location, location in stock in investing, it's cut your losses, cut your losses, cut your losses, which means instead of focusing extensively on how much you're going to win. And very often that's the fantasy of how I'm going to make my killing by investing in the stock market.

Stanley (8m 23s):

Instead of excessively focusing on that it's can be very helpful, very useful, very pragmatic, to be able to say, what can I afford to lose? And one of the central principles is to be able to acknowledge that yourself, what your risk tolerance is, and to be able to cut your losses when things don't go in an up direction, but go in a down direction,

Phil (8m 49s):

Me a list of emotions at the beginning of that answer. And the one that really struck me is regret, because this is not something that you often hear because you hear about fear, uncertainty, doubt, all of those sorts of things, but regret, how does that operate? If I can just talk about a personal story here. A couple of months ago, I've had this oil stock, which was doing nothing for years, nothing. And I thought I'm going to cut my losses. And then of course, with the oil price, doing what it is at the moment, I just look at it and go, why did I sell it? And is that the kind of regret that you're referring to there and how it can affect your future in investing?

Stanley (9m 26s):

Yes, that's one regret and regret is also very closely related to feelings of shame, shame about having done or not done something which then has backfired in some way. So if I can try and share with you a personal story of my own in this realm, when I was a new investor, a colleague of mine, he was actually psychology consultant to me. And he recommended to me a new issue of a thought, which specialized in several things. One of the areas in which they specialized was in agriculture and they had a fertilizer, it was a new company and they had a fertilizer that grew sweet potatoes, the size of cantaloupes.

Stanley (10m 15s):

It was amazing and sweet potatoes, the size of cantaloupes. And by coincidence, I was in New York city living in New York city and they had their annual meeting at the nearby hotel in New York city. And I went to the annual meeting and they displayed the sweet potatoes. And we also took some home because they were so amazing at any rate. I was a pretty new investor at that point. And so I decided I'm going to go with us. And this wasn't a suggestion from a taxi driver or a hairdresser. This was a recommendation from someone who do something or so I thought, well, he did, at any rate I bought the new issue is $5 a share and it was magnificent.

Stanley (11m 1s):

It flourished. And it, within two years it went from five to 95, 95 you're Rica. This was Eureka. This was my dream come true. And then something happened and I don't know what happened, but the stock to go down and as the stock started to go down, I incrementally alternated between getting anxious and feeling, oh, it's going to come back. You know? And at one point I called into the company and I spoke to someone in management and I said, what's going on? It's like, I'll go with them. And she reassured me, you know, this is a temporary blip and it's going to be fine. And this is a great company and it's all going to be fine.

Stanley (11m 43s):

Anyway, long story short, ultimately the stock plunged all the way to zero. And I think I probably got out at my $5 per share, but I lost that whole profit. That was the regret we all have would've, could've should've stories. And that was my regret. Why wasn't I savvy enough to take more of my profit along the way? Why was I so greedy that I had to hold on? Even when there were so many signs there, like Cassandra telling me it didn't plunge overnight from 95 to five, that was over an extended period of time. But I, I didn't want to believe that this was happening.

Stanley (12m 23s):

And so I held on and held on. So ultimately to respond to your point about regret, that was a major area of regret for me. The other factor that often enters into regret is sometimes when people follow the idea of cutting their losses and then they sell a stock and they cutb that loss. And then let's say the stock then goes up. So then they have double shame. First, the head shame for having sold it, which feels they were acting precipitously too soon, which maybe they weren't, if they were following the basic principle, but then the fuck rebounded and went up. So now they have a second out of shame for having lost their connection to a winner.

Stanley (13m 9s):

And everybody wants to feel like a winner. Part of investing for many people is to feel like a winner, because if you make a good investment, you feel somehow that you're smart and you're a winner. And one of the problems with that, and it's, that's another problem, which is there's a tendency sometimes to confuse, look with skill. And, you know, if you make a good investment and it goes up, it may be lucky or maybe skill. If you gain 20% in your portfolio last year, as many people did, and you may feel you were a terrific stock picker, but if you look at the Standard and Poor's 500 average index that gained like 28%, then you weren't as smart as you think you are.

Stanley (13m 54s):

So your game may have been well, look that skill. And that's where regret comes in.

Phil (14m 3s):

Another problem for people is the noise. There is so much noise out there, and there are so much financial television and media, and it's almost like they're calling a football game, you know, where the, you have the opening play, you have the halftime show, and then you have the closing of it. And then the raking over the coals of what happened that day and what are some tools that people can use to kind of put that noise in the background?

Stanley (14m 28s):

Well, you know, what's interesting about the noise for me, the most interesting thing is that whether it's on the CNBC or other shows, they're always touting the latest thing that you should do this, or do that, or by this about that. But what's really interesting is they almost never recommend the sell. It's very, very rare that any financial experts so-called expert is recommending a sell. So the noise is always in the direction of buy, buy, buy, buy, and that doesn't always pan out. And you have to be able to tune out the noise and follow the basic principles about investing.

Phil (15m 9s):

There's a quote from your, from the book. And I found this really interesting, and this is about a study by Gustaf, I'm not sure about the pronunciation's, Gustaf Torngren and Henry Montgomery that found that when professionals said that they were a hundred percent confident in their picks, they were actually right. Less than 12% of the time.

Stanley (15m 28s):

That's right. Which tells you a lot about how much faith you going have in a lot of these professionals, which leads me to another quote, which is a quote by Albert Einstein, who said foolish faith in authority is the worst enemy of the truth. Albert Einstein, it's

Phil (15m 48s):

Fantastic. A

Stanley (15m 49s):

Foolish faith in authority. So if you're listening to those experts who are telling you about the Royal road and it doesn't work out, and very often it doesn't work out because there, as you just pointed out, they may be right. 12% of the time, according to this study that you quoted, that's not a good track record.

Phil (16m 9s):

Yeah. But so it's like that. My favorite quote from William Goldman, who read that book about the movie business, he was a movie screen writer and his quiet is nobody knows anything.

Stanley (16m 19s):

Yes. Which reminds me of another quote by Robert Frost, which is nothing gold can stay. That was my experience with that slide that went from cliff, the 95, nothing gold can stay, be prepared for the let down.

Phil (16m 37s):

I'm interested to hear more about shame because this is an emotion. And I know personally I felt it and you've obviously felt it as well. And many people that I guess have been on your couch have felt shame. So tell us a little bit more about shame and investing.

Stanley (16m 51s):

Yeah. Shame is a powerful, very powerful emotion, and it kind of highlights the meaning of shame that you're defective or deficient in some way. So if you invest in a thought that goes south, you're a loser and you feel ashamed about having beta investing because you're deficient or inadequate with the, that in some way. And again, there's a famous quote by Peter Lynch, who is the manager of the Magellan fund for many years, one of the most successful fund managers in history and Peter Lynch said about shame. This is a quote, there's no shame in losing money.

Stanley (17m 31s):

Everybody does it. What is shameful is to hold on to a stock or worse to buy more of a wonderful fundamentals or that you're writing. So there again, that speaks to the importance of cut your losses, cut your losses, cut your losses. If you hold on and don't coach a losses, you're at greater risk for a small loss, becoming a big loss. And then the level of shame, extrapolates exponentially, Steven Cohen, who is a very famous hedge fund personality has said, he's got a bunch of portfolio managers and these were billions of dollars now.

Stanley (18m 12s):

And he claims that if his portfolio managers are right 55 to 60% of the time, he's thrilled. That's how they make their money, which means they're wrong. 40 to 45% of the time. The implication of that is if you can cut your losses before they morph into large losses, you could be right less than half the time and still be a big winner in the stock market. So all of these points from history and from quotes, from what other people are saying are useful information

Phil (18m 48s):

Interesting that you give that statistic because I had another guest a while ago who came on and said, it's so counterintuitive to think that way, because you wouldn't go. You wouldn't want to go to a surgeon who was only right. 55% of the time, for example, and people are just not keyed into that way of thinking, are they, I just wanted to give you another quote from the book.

Phil (20m 37s):

And this can lead us into talking about financial advisors is that too many of us have internalized negative attitudes about ourselves as inadequate when it comes to managing our own investments. And this is possibly why people do turn to financial advisors who believe is sometimes not the answer

Stanley (20m 56s):

Psychologically, especially for new investors. It's understandable. It's natural that they don't have a lot of confidence in their ability to invest the new edits. They're just stunning. So there's a part of them that is kind of looking for kind of a guru to connect with. Hopefully we'll leave them to the Royal road, to the land of riches. And so for those who then choose to connect with a financial advisor and in the United States, there's something like 54% of investors with a financial advisors, which means more than half of the investors do not use financial advisors.

Stanley (21m 41s):

So it's by no means a ubiquitous thing that people do. But for those that do one of the things that frequently happens is that there's a power differential. So the expectation is this financial advisor is going to be so much more knowledgeable than I am. And in many ways he is, but it doesn't mean that he's infallible and we are discovering more and more that many of them are quite fallible, but the investor tends to be more different to the new financial advisor because he feels, I don't know very much. And he's investing a lot of hope in the portfolio that he's going to create with the help of this financial advisor.

Stanley (22m 27s):

And so it becomes very important for investors. And I have a whole number of examples. I want to share with you before we stop today as to some of the questions that can be very useful for a new investor to put to a potential financial advisor before they proceed to hire him. So it's about looking for the girl, looking for someone who is going to help me find the magic way and approaching that usually in a way that has a certain amount of deference to an authority, maybe more than is required. I can give you my own, my own tale about that. In my book, I call it my 30 year Odyssey.

Stanley (23m 9s):

I work with a whole number of financial that I would say about 10 different financial advisors, all of whom have failed. And the first one who is the one that I stayed with the longest was someone who was very personable, very likable. He took me out to lunch. He told me about how to proceed. We forged the connection and he stayed in touch with me on a regular basis, which was very nice. And he was always respectful toward me. One of the things that was very compelling and how I work with him is every once in a while, this is how I would proceed in buying certain securities, certain equities. And he would call into me and say, Stan, I want you to consider taking a position and stock XYZ.

Stanley (23m 52s):

I said, all right, tell me a little more about it. And he said, tell me something you say, because the boys downtown are recommending it. What did that mean? The boys downtown that he was at a branch office in Midtown Manhattan and the boys downtown where the research analysts on Wall Street and they were piping their recommendations at the branch level. But that was such a compelling way to say it, the boys downtown, and it had an aura about it, the boys downtown or recommending. So I would jump in and follow his lead, follow his suggestion about pursuing the stock XYZ because of the boys downtown. So I said to him at one point, well, why am I not doing better?

Stanley (24m 34s):

And he said, well, to tell you the truth, we don't really know more than, you know, I said, come on, you gotta be kidding. He said, I'm telling you the truth. And you know what? I didn't believe him. And then I pause and I thought to myself, it's not that I don't believe him. It's that I don't want to believe him. I had put him on my guru pedestal and I needed to keep him on my kind of, I don't want to take him off the pedestal. And so I didn't want to believe is true confession. Ultimately it took me a long time and that's one of the four most common self-defeating patterns, which I'll mention in a moment.

Stanley (25m 15s):

But ultimately I did leave him as well as the nine other financial advisors fill me in one way or another. And I started to create my own do-it-yourself portfolio. And I discovered that I did better with my own portfolio than my following my financial advisors. One of the things I recommend to clients who come to me with these financial issues, if you're not ready to leave your financial advisor, or you're not completely satisfied with create a parallel portfolio, which you do by yourself and watch that over two years, compare how your portfolio does against your portfolio in your brokerage account.

Stanley (25m 60s):

And very often they discovered because of the cost and expenses related to transactions and the fees that they have to pay to the financial advisor as well as hidden fees as well, which is a whole other story. Those portfolios don't do as well as a self-directed portfolio. The financial advisors often get their daily aides from mutual fund managers and studies show that up to 75% of mutual fund managers underperform, their benchmark meeting, industrial average or the Standard and Poor's 500, right? So financial advisors are very fallible.

Stanley (26m 40s):

The four most common self-defeating patterns are 1) buying high and selling low, 2) the herd effect, which means following the herd and following up what you think, we'll see everybody else's doing and then going along with that and related to that. And related to that is what we call FOMO, F-O-M-O, the fear of missing out: if everyone else is buying something and it seems to be going up, then what a jerk I would be if I didn't do that also. So I'm afraid, I have fear of missing out. I don't want to leave the party. I want to join the party. So that's FOMO.

Stanley (27m 20s):

And the third self-defeating pattern is looking for the guru and not recognizing the fallibility of many gurus. And the fourth self-defeating prominent factor is staying too long with an underperforming financial advisor, which is what I just described with the fee. Gaia was telling me about the boys downtown.

Phil (27m 41s):

Is it enough for people to have these patterns pointed out to them for the scales to fall from their eyes, or do sometimes people need to be beaten over the head with a stick so that the point is made to them?

Stanley (27m 53s):

Well, you know, one of the questions you had posed to me and the preempt was about self-deception and how do we even become aware of filter session? And many times it's very hard to become aware, but the answer really to the question is to not expect, never to make a mistake self-deception is lead to mistakes. But the important part is to be able to learn from your mistakes. So like with my example that I gave you a few minutes ago about that sweet potato, as big as cantaloupes story stock was I was deceiving myself that this was going to continue to be a great investment and it was until it wasn't.

Stanley (28m 36s):

And then when it thought it to be it wasn't, I wasn't ready to accept that I was immersed in profound self-deception. So that was a costly mistake. Not that I lost a lot, but I lost by huge gain. That was a huge learning story. So I was very diligent going forward in cutting my losses in the future.

Phil (29m 0s):

Are there any other ways you can avoid self-deception? Are there any other strategies or tools that can be used?

Stanley (29m 7s):

Yes. For example, one question I would have for beginning investors is when there's bad news about the market, like there is currently do you tend to stop looking at your statements, the monthly statements or your quarterly statements, whatever they are, you don't want to see them. You don't want to look at you don't want to have to be acquainted with the bed. So that's like you deceive yourself into not worrying about it. You know, I don't want to have the pain I'm feeling, but that similarly related to that is studies have shown the pain of loss is as much as two and a half times as great as the joy of a win.

Stanley (29m 49s):

So, as I said earlier, people want to feel like winners. People don't want to have to feel like a loser. If they have to open their brokerage statements and see gloss from last month, this month, that can have a negative effect on them. So they often avoid doing that. That's a form of self deception. One of the 10 financial advisors that I mentioned that I had worked with early in my investing career, I had said to her, I'm going to follow some of your recommendations and suggestions. She said, well, what's your expectation? What are you looking for? I said, well, I'm hoping for gain hopefully 20, 25% a year, but I really was thinking privately, but I didn't have her to say it is, I'm looking for a home run, but she said back to me, she said, well, I got to level with you.

Stanley (30m 39s):

We feel if we can provide a regular gain of 10% a year, we're pretty happy with that. So she kind of taught me how to be realistic until I got that response from her. I was deceiving myself into believing or thinking that I could expect a much larger gain. Probably the biggest form of self-deception comes from a very famous quote by John Templeton, who said the four most expensive words in the English language or this time it's different. This time it's different that the four most expensive forwards, because if you were in a powerful bull market, as we have been for the last 10 years until quite recently, then there's a tendency to think, well, this can go on indefinitely.

Stanley (31m 29s):

There'll be gains in the stock market year after year, after year. And that requires the disbelief in the knowledge of the stock market history, which is that they wrote bull markets and there were bear markets and there were recessions and it doesn't always indefinitely go in a straight line upward that's perhaps the biggest self-deception this time is different than

Phil (31m 53s):

That's something I speak about a lot on this podcast is that really, if you're prepared to the main way to have significant gains over a long period of time is to invest directly in a couple of index funds for the longterm, put it in the bottom drawer. Don't look at it for 10, 20, 30 years and keep on adding to it regularly. Whereas if you want to start thinking about investing directly in stocks and companies, you've actually got to go through a lot of learning and it's learning about companies. It's a learning about fundamentals, but it's also learning about yourself. As you say, as an investor,

Stanley (32m 30s):

Yes, there's no one size fits all. And there's no one way I have colleagues who are heavily invested in the stock market. This I am, but I, these days I'm doing it myself, I'm managing my own portfolio. And they're telling me about their experiences, which maybe are as good as mine, maybe less. So maybe a little more. So it doesn't matter. But what they're also saying is they're paying fees to the people that manage their accounts. And I said, well, why do you want to pay so many thousands of dollars a year to have your accounts manage when you could be doing it? As I do it by myself and their response to me, usually as well, I've reached the point.

Stanley (33m 13s):

I don't want to have to be bothered with that. You know, I'm comfortable in giving thousands of dollars to someone to do that for me. Well, that's a choice. That choice would not be my choice apart from the fact that I also get satisfaction about seeing what I'm doing and how long investing, but apart from leaving that aside, it would be a painful choice for me to be paying so many thousands of dollars to people who also to some extent, in some cases, so a great extent or fallible. I'm not that great at it for other people. It could be look invested in a couple of these index funds and put it aside and don't worry about it. Don't worry about it later. Or I'll look at it later and I'll go on to other things that interest me or the buy investment portfolio.

Stanley (33m 58s):

That's fine if that could work for them. But a lot of people are more, especially increasingly now people or into the stock market are looking at the stock, checking their portfolios on a regular basis. But every day, not every hour does this, that becomes too compulsive. You don't want to have to do that, but people are more involved when they were 10 or 20 or 30 years ago.

Phil (34m 21s):

Yeah, but it's the long-term investors looking at the five minute charts. So you refer to the questions that people, especially beginners should be asking financial advisors. What are those questions?

Stanley (34m 33s):

Can you to feel that it's okay to raise questions that you don't simply have to accept whatever the financial advisor is presenting to you. So for example, you might ask the following questions without feeling that you're being overly assertive or overstepping your bounds. One, does he or she invest his own money in the stocks or funds that he recommends to what stocks and funds does he own? Personally, these are the ways of getting information that could be useful and guarding you whether or not what to work with this person three, does he get paid to promote or select a particular investment product for how long do clients typically stay with him?

Stanley (35m 18s):

You want to know more about his, this three as an advisor, you know, five. And this is really important for you to know, people tend to neglect the asking these questions, like what are the fees, the transaction costs and hidden charges that are applicable to my account. Six, ask for three references that you could contact that he has worked with seven. Is there any history of client complaints or regulatory actions and eight, what is his investment philosophy and strategy for success? The more you can pose these questions and don't be shy about asking, it might feel like you're being a little presumptive or pushy, but these are all legitimate questions.

Stanley (36m 4s):

And as a consumer, as a potential investor, who is looking to hire a financial advisor, who's going to be making some money from working with you. You have every right to ask and pursue these questions to your own satisfaction

Phil (36m 19s):

And hopefully shift the power balance a little.

Stanley (36m 22s):

Exactly. Yeah.

Phil (36m 23s):

So Stanley, tell us about the book, the title and where people can find it and find more information about you.

Stanley (36m 29s):

Yeah, sure. The book is available on Amazon and on Barnes and Noble it's called "Smart Money", as you mentioned, "Smart Money: A Psychologist's Guide to Overcoming Self-defeating Patterns in Stock Market Investing". And I had a lot of fun writing good about this book. And it also was very self-revealing in terms of sharing my stories, some of which I've mentioned to you, but also more importantly in providing some useful information that people especially beginners might benefit from in going forward and how they're going to,

Phil (37m 6s):

Well, I must say I'm enjoying reading it myself. I'm about halfway through, but I'm definitely going to be finishing it and it's been, it's been great. And just even talking to you today about issues like regret and shame, which are sort of psychological situations, which you don't even really think about in investing.

Stanley (37m 23s):

And I also can be reached at stanleyteitelbaum.com.

Phil (37m 27s):

Okay, well, we'll put all the links in the blog post Stanley Teitelbaum. Thank you very much for joining me today.

Stanley (37m 32s):

Thank you so much for having me. This was a lot of fun. Take care.

 

Stocks for Beginners is for information and educational purposes only. It isn’t financial advice, and you shouldn’t buy or sell any investments based on what you’ve heard here. Any opinion or commentary is the view of the speaker only not Stocks for Beginners. This podcast doesn’t replace professional advice regarding your personal financial needs, circumstances or current situation.

 

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