I stand out on the Aptus team for having not played major college basketball, but as an avid fan I can at least contribute to the banter. Complementing the content put out by my playing partners at The Backcourt Report, I periodically share my “Starting Five” posts highlighting the best I can find in the areas of investment management, behavioral finance, and the advisory business. I also throw in a favorite podcast episode, and an “oldie but goodie” post that warrants a new read. Enjoy, subscribe, share!
The Importance of Behavioral Differences: we talk a lot here about investment behavior, this one is about the way people work together. Practice management consultant Beverly Flaxington shares ideas on the importance of understanding the work style of each member of an advisory team, and how leaders can best allocate resources and responsibilities.
Can More Information Lead to Worse Investment Decisions?: study after study shows one clear outcome of gathering more information; it leads to more confidence. Unfortunately, the additional due diligence doesn’t always lead to better decisions, just more anchored ones.
Loss Aversion in Professional Golf: may not seem relevant to investing, but it absolutely is. Two professors researched the behavior of PGA golfers on holes whose par rating had changed from 5 to 4. In support of Kahneman and Tversky’s work, they found significant loss-averse behavior despite no major changes to the hole or the context of competition. Prospect theory lives, in investing and beyond.
Where Big Leaps Happen: as Morgan Housel knows so well, “a good story reduces the effort required to understand something.” As he often does, he packs textbooks of information into 1000 words of simple, memorable insight that both teach and inspire. Brilliant, as always.
C.A.F.: Rusty Guinn is another gift to readers. He takes non-investment, memorable stories and finds the perfect analogy. Or vice versa. This one is a great short read about doing what’s best for clients, punctuated by a line to which all advisors can relate. “The intervening truth is that our evaluation of what is best for a client must always take into account the willingness of a client to stick with what we’ve designed for them.” Yep.
*Off the Bench: great podcast with Chris Voss 3 Science-Backed Tactics That Will Make You a Master Negotiator. Have heard him before and love his expertise. In this one, Donald Miller kept it short which is good for my attention span, but even at that there were some great ideas about attentive listening and information gathering.
**Throwback: an old post by Michael Mauboussin Thirty Years: Reflections on the Ten Attributes of Great Investors. Someone deserves credit for putting this in front of me recently, and I can’t for the life of me remember who should get the credit. In any case, a free semester of great insights on valuing investments and understanding market expectations.
Hope you enjoy this edition of my Starting Five, join the updates here!