Howard Marks: Navigating Crises - Creed, Preparation and Emotional Control
Send us a textHoward Marks – navigating the crisis - creed, preparation and control What kind of mindset and organisational culture does it take to survive and to thrive in market turmoil? Let’s be frank, there are a vanishingly small number of people who have navigated multiples crises successfully and have something interesting and reflective to say it about it.One person who does is Howard Marks. Founder and Co-Chairman of Oaktree he is, for our (and Warren Buffet’s) money, one of the most thoughtful and experienced investors in the market today. In the latest episode of Decision Nerds, we got to speak to him in the middle of recent market craziness. We had a fascinating chat - not about tariffs, Trump or trade wars, but the inner game; what individuals and firms need to succeed in this environment. Joe's writing on investment decision-making is here. You can find Paul on LinkedIn here.
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Dealing with Trumpcertainty
Send us a textThe Disruptor in Chief’s blizzard of executive orders, tariffs and foreign policy positions and his propensity to change them is making life difficult for investors and clients. Things look and feel uncertain, perhaps more so than in living memory. In this bite size episode, we discuss the science and practicalities of dealing with uncertainty. The Electric shock study refernced in the discussion.
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Room 101: Project Coldplay
Send us a textAs the wordly philosophers of Coldplay suggest, getting what you want, but not what you need, might leave you in need of fixing. Leaps in investment platform technology give investors more information, more choice and the ability to act more quickly and easily. We want that, but is it what we need? As Joe points out, many of the positive developments in tech are double-edge swords. He thinks from a behavioural perspective, now is one of the worst times ever to be an investor.𝗞𝗲𝘆 𝘁𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀:#𝟭 𝗟𝗮𝗰𝗸 𝗼𝗳 𝗳𝗿𝗶𝗰𝘁𝗶𝗼𝗻 – it takes me less than 10 seconds from launching my platform app on my phone to being able to deal. Is that a good thing? In one dimension yes, but the overarching story of behavioural finance is people doing irrational things that create bad outcomes. Slick and seamless tech combined with noise, FOMO and a constant barrage of stimulus has the potential to exacerbate these problems.#𝟮 𝗔 𝗰𝗼𝗺𝗽𝗲𝘁𝗶𝘁𝗶𝘃𝗲 𝗱𝗼𝗼𝗺 𝗹𝗼𝗼𝗽 – tech providers exist in a highly competitive environment and 'faster, easier, more' are key facets of the battleground. No one wants to lead a pitch with, ‘and….this is how we reduce information available to clients and make it harder for them to trade’.#𝟯 𝗥𝗲𝗳𝗿𝗮𝗺𝗶𝗻𝗴 𝘁𝗵𝗲 𝗴𝗮𝗺𝗲 – whilst it might be possible to get providers around a table to agree a common approach that helps investors manage their worst impulses, a market-based solution is likely more workable. This needs those who advise on these platforms to be changing the conversation and including behavioural design as part of any selection process. Imagine a world where providers compete on how they help clients beat their biases as much as how slick the tech itself is. 𝗣𝗵𝗿𝗮𝘀𝗲 𝗼𝗳 𝘁𝗵𝗲 𝗱𝗮𝘆? 𝗜𝗻𝘁𝗲𝗹𝗹𝗶𝗴𝗲𝗻𝘁 𝗳𝗿𝗶𝗰𝘁𝗶𝗼𝗻“Intelligent friction,” is a concept from the payments industry which focuses on interventions based the risk level of a transaction. It aims to balance a good user experience with effective security. Buy a coffee in a new country when you land there fine, buy a laptop, expect an intervention. There are some obvious investment analogies here. And of course this is only one tool in the arsenal, getting better at education and helping clients help themselves is also pivotal.We don’t want to lose all the good things that tech brings, but to mangle Coldplay, we should perhaps be trying to help people want what they need.
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Room 101: Performance fees - heads I win...???
Send us a textJoe doesn’t like performance fees - but why? Are they innately problematic or just badly and perhaps cynically implemented in the mutual fund industry? In this bitesize episode, we get into alignment of interests, bad design and investor behaviour.𝗧𝗵𝗲 𝗺𝗼𝘀𝘁 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁𝗶𝗻𝗴 𝗽𝗮𝗿𝘁 𝗼𝗳 𝘁𝗵𝗲 𝗰𝗵𝗮𝘁?Performance fees are most often discussed in the context of alignment and risk sharing. Joe raises an interesting question - can they also be used to nudge investors away from unhelpful behaviour?
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Room 101: Chartcrime?
Send us a textWe all have things in our working lives that drive us insane. Anyone who regularly listens to the pod will know that there are a few subjects that consistently raise Joe’s blood pressure to unhealthy levels…In the interest of Joe's and our future guest’s wellbeing, we wanted to find a way of dealing with these issues productively. Our solution, Decision Nerds: Room 101 Room 101 is the torture chamber in George Orwell’s classic book, 1984. For those who cross its threshold, it contains, ‘the worst thing in the world’. Many Brits will remember the Room 101 TV and radio shows where celebrities suggested what they thought was the worst thing in the world and competed to have their pet hate consigned to oblivion (my personal favourite being Jimmy Carr and tax avoidance schemes).Our take on Room 101 is slightly different. Like the celebrities, Joe, I and our guests will discuss the issues that make our eyes roll. But it won’t be just a winge-a-thon, we’ll try to get to the heart of the issue and start a productive discussion. 𝗖𝗵𝗮𝗿𝘁𝗰𝗿𝗶𝗺𝗲We're kicking-off with ‘chartcrime’ and something that particularly riles Joe - the overlaying of time series, such as inflation, from different periods and looking for predictive patterns. Are these charts a problem, or is it how they are used and framed? In the episode, we discuss:𝗣𝘂𝗻𝗱𝗶𝘁𝗿𝘆 𝗮𝗻𝗱 𝗽𝗿𝗲𝗱𝗶𝗰𝘁𝗶𝗼𝗻 and how different investor types might confuse the two𝗧𝗲𝘅𝗮𝘀 𝘀𝗵𝗮𝗿𝗽𝘀𝗵𝗼𝗼𝘁𝗲𝗿𝘀 𝗮𝗻𝗱 𝗰𝗵𝗮𝗿𝘁 𝗰𝗿𝗲𝗮𝘁𝗼𝗿𝘀 - are they the same thing?𝗧𝗵𝗲 𝗮𝘄𝗸𝘄𝗮𝗿𝗱 𝗾𝘂𝗲𝘀𝘁𝗶𝗼𝗻 that might stop people producing these chartsOur Room 101 episodes are bite-sized and designed to provoke a conversation. Hot takes, or deeply considered meditations are both welcome. https://www.linkedin.com/posts/paul-richards-34965883_%F0%9D%97%A5%F0%9D%97%BC%F0%9D%97%BC%F0%9D%97%BA-%F0%9D%9F%AD%F0%9D%9F%AC%F0%9D%9F%AD-%F0%9D%97%96%F0%9D%97%B5%F0%9D%97%AE%F0%9D%97%BF%F0%9D%98%81%F0%9D%97%B0%F0%9D%97%BF%F0%9D%97%B6%F0%9D%97%BA%F0%9D%97%B2-we-activity-7282682076963733504-tB9s?utm_source=share&utm_medium=member_desktopAnd of course, feel free to submit the most egregious example of chartcrime you have ever seen (if you want to raise Joe’s blood pressure).
We talk about human behaviour and decision-making with an investment slant. And tell terrible jokes. Join us as we dive into the trenches with industry innovators, academics and mavericks.
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