25 March 2020
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In this week’s episode hosts Dan Mikulskis and Mary Spencer are discussing the psychological and behavioural elements of investing with LCP consultant Nikki Matthews. At the end of the day markets are just a collection of people, and all investors make decisions influenced by emotion, so human psychology plays a big role. This is particularly relevant in times of big market volatility like we see today.
- Why investors that did simple rebalancing outperformed those that didn’t following 2008
- The influence of fear and other emotions when it comes to investing in volatile times
- Loss aversion, what it means and how it manifests itself
- How behaviour can be one of the biggest risks in investing
- The power of stories and how these can influence us for good or bad
- How regret and action bias cause us to sometimes do things when we shouldn’t
- How the status quo influences our behaviour in ways it shouldn’t
- Why rebalancing is one of the most under-appreciated things in investing
- Nikki’s love of singing rock music, and her views on Queen vs the Rolling Stones
Most importantly they cover the three key things Nikki believes investors can do to combat some of these biases:
- Decision logs
Useful links referred to in our podcast this week
- 'Curb your behaviour - how can your behaviour affect your investment and what can you do about it?' by Nikki Matthews, published in our Vista Summer 2019 edition
- Article Mary referred to Nikki’s recommendation – influence by Chialdini Influence: The Psychology of Persuasion
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Each LCP investment uncut podcast is for information and marketing purposes only and does not constitute any form of investment or financial advice or a financial promotion (under the Financial Services and Markets Act 2000). All views expressed by the podcast hosts and guests are purely their own opinions and do not represent those of LCP, its clients or affiliates. Our podcast listeners should always seek independent financial or legal advice before making any financial or investment decisions. Please refer to the Legal Notices section on the LCP website for further information.