Why Smart People Make Dumb Money Decisions SB1877

Three genuinely sharp financial minds sit down today and, one by one, admit to the same kind of dumb money moves everyone else makes. Not because they didn't know better. Because knowing better and doing better turn out to be two completely different skills, and your brain is very good at making bad ideas feel reasonable in the moment. This episode isn't about learning new investment tactics. It's about learning to recognize the exact moment your own mind starts working against you, and what to do about it before it costs you. What You'll Walk Away With The three specific flavors of overconfidence that combine into what one expert calls "a recipe for disaster"Why "I'll wait until it comes back" is one of the most dangerous sentences an investor can say to themselves, and when it's actually trueThe surprising reason financially literate people still make emotional money mistakes, according to research on an unrelated professionA simple writing exercise that makes you far more likely to stick to your own financial planWhy betting on what's familiar, your employer's stock, your home country's market, is quietly one of the riskiest things you can doA martial-arts-inspired mental trick for turning your own biases into tools instead of trapsThe real reason "this time is different" almost always feels true and is almost always the wrong conclusion to act onWhy This Matters Now In your 40s, you've likely made enough financial decisions to have a track record, some smart, some you'd rather not revisit. The goal isn't to eliminate emotion from money; that's not realistic, and it's not even the point. It's to recognize the specific moments your gut is about to overrule your plan, and to have something in place, a rule, a person, a system, that catches you before it does. Confidence with money doesn't come from never being tempted to make a bad call. It comes from knowing exactly what you'll do when you are. From the Basement The crew's year-long trivia championship takes a wild turn with a Spanish treasure fleet question that somehow ends in someone getting bonus points for pure luck, which is a fittingly ironic way to close an episode all about how bad we are at judging our own luck. Resources Mentioned The Behavioral Investor by Daniel Crosby https://www.amazon.com/Behavioral-Investor-Daniel-Crosby-ebook/dp/B07HH99WH8 — second edition available for preorderAfford Anything podcast https://affordanything.com — Paula Pant's showPersonal Finance for Long-Term Investors podcast https://pfltipodcast.com — Jesse Cramer's show See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

• 0:00Speaker 00

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• 1:02Speaker 02

  This is hot, Ray.

• 1:04Speaker 03

  Symmetrical book stacking, just like the Philadelphia Man's Tribulation of 1947.

• 1:10Speaker 02

  You're right, no human being would stack books like this.

• 1:13Speaker 03

  Listen, you smell something?

• 1:22Speaker 04

  Live from the basement of the YouTube headquarters, it's The Stacking Benjamin Show.

• 1:36Speaker 04

  I'm Joe's mom's neighbor Doug, and you know the maybe I should games you play with your investments? Maybe I should invest more aggressively, less aggressively, with more tax efficiency? Today, what are the biggest mind games we play and how do we better solve the investing puzzle? We'll tackle a ton of them, but that's not all we'll tackle. We'll see which of our contributors to this discussion can best answer my trivia question and come one step closer to winning our year-long trivia challenge. And now, a guy who says his biggest mind games revolve around which board game to play this weekend, it's Joe Saul Sehaye.

• 2:20Speaker 00

  Hey there, stackers. And it is a hard game. It's such a hard game to decide which game to play this weekend because there's always so many choices. Hey, everybody. Welcome to Friday. Let me be the first one to welcome you to the Stack Your Benjamin Show. I am Joe Saul-Sehy. And man, we got a great show for you. Well, we're going to start off with this guy. How are you, Doug?

• 2:40Speaker 04

  Doing great, Joe. Doing great. I feel like today I finally got all my ducks in a row, but it also feels like the ducks are crossing an eight-lane freeway in Atlanta.

• 2:49Speaker 00

  That is a bad, that's a bad Friday. Maybe just a little bit.

• 2:54Speaker 04

  You think you got it all together? You just hope nobody runs you over.

• 2:56Speaker 00

  Maybe just a little bit going on in Doug's world. Well, the good news is OG's not running us over today because he's not here, but we have some other people to run you over instead, Doug. I don't know if that's the right segue. Might not be. But the first person hopefully won't run you over comes to us from Manhattan, where in her luxurious high-rise apartment, Paula Pant from Afford Anything is here. How are you?

• 3:19Speaker 05

  I am doing great. How are you, Joe?

• 3:21Speaker 00

  I am fantastic. Now that we're going to talk, you know, last week, we talked about AI. But this week, Paula, we're going to talk about something bigger than AI, which is our brain.

• 3:31Speaker 05

  So, artificial intelligence? Naturally dumb.

• 3:34Speaker 00

  Exactly. Debatable.

• 3:37Speaker 00

  You're like, how did I come up with that? Oh, I wrecked that plan all by myself.

• 3:40Speaker 05

  Yeah, exactly.

• 3:42Speaker 00

  I've done that before. I don't know if you've ever wrecked a plan.

• 3:44Speaker 05

  I take a sledgehammer to my plan constantly.

• 3:47Speaker 00

  A guy, Paula, who's constantly wrecking plans in upstate New York is our good friend for the Personal Finance for Long-Term Investors podcast, Jesse Cramer's here.

• 3:55Speaker 06

  That's a, that's a good segue. That's a good segue. It's very on-brand for me. You know, I just take something that's pleasant and straightforward and throw some chaos in there. Agent of chaos, Joe. That's what I try to be here on the show.

• 4:07Speaker 00

  Excellent. You ever find yourself talking to yourself about what type of chaos you're going to create? Are you actively teaching those young children of yours how to create more chaos?

• 4:15Speaker 06

  Well, that's the thing. I mean, part of being a chaotic planner is that you never plan your chaos in advance. It just, it's right off the top of your head, right? It just, it just flows out. It's like when Doug is doing his announcing here. It just flows off the tongue. It's natural, correct, Doug?

• 4:28Speaker 04

  Absolutely.

• 4:29Speaker 00

  It's a part of being Doug. It's an eight-lane freeway in Atlanta, right, Doug? Yes. And there are two reasons why I, what are three reasons I want to talk about this? Number one was last week, we talked about AI, what's happening with AI. We're all worried about AI. Maybe we're over worried. We talked about that last week. Maybe we're not worried enough about our brain and what our brain does to sabotage our own plan. That's number one. Number two is Jason Zwig, and I always pronounce Jason's last name wrong. Paula, how do you pronounce that?

• 4:58Speaker 05

  Zwig. I mean, I don't know if that's right. That's just how I say it.

• 5:01Speaker 00

  I don't know. Every time I pronounce it though, I get letters from people going, yeah, no. But we're going to keep trying. So Jason Zwig wrote about this in the Wall Street Journal, the games that we're playing. But the biggest reason is because our special guest today, sitting in for OG, is this is what he's all about, is the behavior game and trying to help our thinking with our thinking. Dr. Daniel Crosby is here. How are you, man?

• 5:24Speaker 07

  I'm good, man. Just left the eight lane freeway in Atlanta myself. And so coming at you from Utah.

• 5:30Speaker 00

  Where it's mostly two lanes. I've been through a lot of Utah. There's a lot of two lanes there.

• 5:34Speaker 07

  A lot of two lanes here. It's true.

• 5:36Speaker 00

  It's kind of the way I appreciate life is when I'm in little two lane land. But when it comes to our brain, I think probably trying to control two lanes, Daniels, easier than controlling all eight.

• 5:46Speaker 07

  Yeah, it's true. Even the two gets tricky. Let's be real.

• 5:50Speaker 00

  Okay, so you not only talk about this all the time, you've got a brand new book coming out in the fall on this topic. Tell us what's on the burner.

• 5:57Speaker 07

  Listen, man, I've got a book coming out this fall. It's, I timed it with my birthday, so October 16th. So I'd have something to celebrate besides more gray hair. But yeah, I've got a book called The Behavioral Investor. It's a second edition coming out that talks all about your money, your brain, your decision making, and all the biases that get in the way.

• 6:19Speaker 00

  And we might have a couple of those today, Daniel.

• 6:22Speaker 07

  You're too good to me. I love it.

• 6:23Speaker 00

  We might. So you can see, we've got the perfect people on to talk about your brain, your money, and you. How do we mess it up? And how do we stop messing it up? We're going to talk about that today. But first, we got a couple of sponsors who help us keep on keeping on. We are going to hear from them. And then Dr. Daniel Crosby, the Paula Pant, and Mr. Jesse Cramer, we're going to chat about how do we maybe keep the devil, AKA our brain, at bay? Well, you may know the chaos is the name of the game here in mom's basement. What with guests coming in and out, Cooper the cat getting in the way, Doug being, well, being Doug, the holidays make it even worse because it's all about food and big meals.

• 7:06Speaker 00

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• 8:54Speaker 00

  All right. As I mentioned before the break, our inspiration for today's piece comes to us from the Wall Street Journal, Mr. Jason Daniel, is it Zwig, Zweg, Zweg?

• 9:04Speaker 07

  I'm Team Zwig.

• 9:05Speaker 00

  Zwig.

• 9:06Speaker 07

  That's me.

• 9:07Speaker 00

  And Jesse gives that one the thumbs up.

• 9:08Speaker 06

  I'm Team Zwig.

• 9:09Speaker 07

  Yep.

• 9:10Speaker 00

  Okay, Jason Zwig. I get emails every time. It's gonna be Zwig by the end of the episode, anyway. It doesn't matter what I call our buddy Jason. We use so much of Jason's stuff. But what he talked about was this, and this was the first piece of inspiration I had, guys. You know, we've had these Bitcoin ETFs that have opened up all over the place. And he went and did some research into what actually happened inside these Bitcoin ETFs. And not surprisingly, these ETFs have made a lot of money, but the average investor, every time the ETF sank, people took money out. Every time it reached new highs, people flooded money in. And it turns out that the problem wasn't the investment. The problem, when it came to this Bitcoin ETF, is us. Even when I was a financial planner,

• 9:52Speaker 00

  I saw this. This isn't just new to Bitcoin ETFs. We do this all the time. But I want to prove that we're human. So let's talk to our panel. Jesse, do you mind going first with maybe a little self-deprecating humor here?

• 10:06Speaker 06

  Sure.

• 10:06Speaker 00

  What is a time when your brain actually got in the way and maybe wrecked a good plan?

• 10:14Speaker 06

  Yeah, like 8:45 last night when I found myself eating ice cream? Is that what you mean?

• 10:19Speaker 00

  It's 100% what I mean.

• 10:20Speaker 06

  Like I had this plan to lose weight? Yeah, right. I mean, all the time. And that's my mind. I mean, I know we're here to talk about finance, and I've got some good financial anecdotes, but the most common one day to day would be like, oh, I had a plan to work out and eat healthy. And instead, I was too tired to work out, or that's the excuse I tell myself, and I didn't work out, and I ate poorly. Or another one is like, you know what, I want to go into this conversation, and I just want to ask really good questions. I just want to, I'm curious about this person. And then what do I find myself doing midway through the conversation? I'm going on some tangent about some stupid story. And it's like, wait, I told myself I'd. So to me, it happens all the time, not necessarily every day with money, but just all these other mundane, day-to-day things.

• 11:02Speaker 00

  Do you got a money one?

• 11:04Speaker 06

  I mean, yeah. You mentioned Bitcoin in your intro, and I've kind of, what's the right word? A seesawed. I've kind of gone back and forth on the Bitcoin thing and put some money in and then took it out, and then put a little more in and took a little more out.

• 11:16Speaker 00

  Just a little bit, but still it's like, sometimes the dollar amount doesn't matter. It's the thought process behind the dollar amount. And my thought processes there have been inconsistent, irrational. And yeah, I think any good investor or any rational investor when they zoom out on my decision making would be like, that was pretty poor. So yeah, Bitcoin cryptocurrency would be one of mine. Paula, surely you've never let your brain get in the way.

• 11:39Speaker 05

  So many times, so many times. I would say the worst of it was probably during the pandemic because I was just chronically online. And so that exposed me to a lot of garbage ideas. So I bought a bunch of like individual stocks that even though I know better, bought a bunch of individual stocks that performed very, very poorly. I put too much money into cryptocurrency. I held crypto in the wrong places. Man, all of the above.

• 12:08Speaker 00

  Okay. You want to hear the dumb individual stock one I did, Paula?

• 12:11Speaker 05

  Yeah.

• 12:12Speaker 00

  I did. This is, this is number one, I don't buy individual stocks, but I saw that Travis Kelsey was part of a, look at, look at Daniel already.

• 12:24Speaker 00

  Travis Kelsey was part of a group that was buying a ton of shares of Six Flags. Just a ton of, of shares and nobody likes regional theme parks better than I do. I will challenge anybody to like them more. This is a company with so much debt that has been staving off bankruptcy for so long that has nothing good happening and yet I'm like, I do zero research. I'm like, well, if Travis Kelsey is getting married to Taylor Swift, he must know a good thing. I bought some, I bought some.

• 12:58Speaker 00

  Ask me Paula Pant, how much money that's made me.

• 13:00Speaker 05

  How's it doing, Joe?

• 13:01Speaker 00

  Let's not talk about it, Paula. Let's not talk about it. It's going to come up.

• 13:05Speaker 05

  The roller coaster metaphor is apt.

• 13:07Speaker 00

  Yes, but this one's more down than up. I mean, it is, but is it more down or more dumb than up? I don't know. Daniel, you're a guy that, you know, writes about this, talks about this on stages for a living. Surely your brain has never gotten in the way.

• 13:22Speaker 07

  Well, I've never made a decision based on being a Swifty like you, but I've done plenty of dumb stuff. You know, one thing I want to point out is that even positive trades can be remarkably stupid. You know, when Paula was talking about some of the things that she did during COVID, I did some, some of many of the same dumb things that she did during COVID, but some of them came out in a dollars and cents way very well. But I think it's easy to forget how stupid those trades were because they, they ended the way we wanted to. So you can be right and still be a moron when it comes to these things. But when it comes to the single thing that has cost me the most money,

• 14:04Speaker 07

  it was absolutely a poor housing decision that we made years ago. We bid off a really big house, an expensive house. And when we were going to pay for the house, I realized that my credit score was in the garbage because I had forgotten to pay a phone bill when I moved offices years and years in the past. This is amazing. Yeah, a guy who's never missed a credit card payment ever. I had some T-Mobile bill from, you know, 10 years previous that had gotten sent to collections. And so we had to put down about a 55% down payment on this house, which is of course way more than we were expecting.

• 14:48Speaker 07

  So we were house poor. We were, you know, very heavy in on this house. And that process disrupted my plan for years. And I'm not kidding you, it has cost me at least a million dollars over time because it made me so risk averse. I was so heavy, I was so heavy into this house. It disrupted the flow of this good sort of saving and investing path that I was on. And I was so cash poor and house poor for so many years. And just it got me off my game. So even though I made, you know, I doubled my money on the house and, and all this stuff,

• 15:32Speaker 07

  it still was absolutely the worst decision I've ever made because of the way it kind of got me off my game and, and broke my concentration.

• 15:43Speaker 00

  Well, it's incredible how it breaks your confidence, right? Yeah. I mean, it makes you a lot less confident. And by the way, when I said it's amazing, I did not mean it's amazing that a guy like you would have that happen. I meant it's amazing that, uh, that's not even credit. Like, why something like a utility bill or a phone bill has such a prominent place in a big credit decision? Just drives me crazy how flawed some of the ways that we calculate credit and things are. Well, you can see that we've all made mistakes. So, uh, even the smartest among us isn't able to always make the right move. Let's play some of the games, guys. I wrote to a few people off our newsletter, the 201, and I did a little survey.

• 16:28Speaker 00

  And these were the top games that, that these people came up with. The number one with the bullet game was I'm smarter than average. I think, you know, everybody says, Paula, don't invest in anything but index funds because of the fact that, you know, you're not going to beat the, the average. So many people beat the average, but yet the average person goes, well, you know what? If Travis Kelsey did it, I bet this is, this is a super smart thing for me to do because I'm smarter than the average.

• 16:56Speaker 05

  Hmm. Yeah. Isn't there some stat about how like 80% of drivers think that they're above average, which, you know, mathematically speaking is impossible?

• 17:04Speaker 00

  What is that other stat, Paula? The thing Americans lead most in is, isn't all these other things, it's confidence. Like, we lead in confidence.

• 17:13Speaker 05

  Well, I think there are a couple of things going on. Number one is when people get a delayed start, they often want to take excessive risk in order to compensate for a late start or like not enough contributions. And so I think that's part of it. I would guess, I don't have any stats to back this up, but I would guess that if you start investing when you're 22, and especially if you are a high income earner at a relatively young age, if you end up being a high income earner in your twenties and you're investing regularly during that time, you probably feel less pressure. But I think there are people who reach their late 30s, 40s, and they're like looking around and they're going, oh, I haven't really saved anything for retirement yet. And then that panic makes them say, all right, well, market returns are not going to be good enough.

• 17:58Speaker 05

  How do I, how do I make 20% returns?

• 18:02Speaker 00

  Right.

• 18:02Speaker 05

  Yeah.

• 18:03Speaker 00

  But so that is gambler and overconfidence mixed together?

• 18:06Speaker 05

  Yeah, I think so. I think so. And I think a lot of it is just born of like panic.

• 18:11Speaker 00

  Sure. You've studied this, Daniel, overconfidence. I mean, most of us are feeling like we're in the, you know, top 20%. What's going on there?

• 18:19Speaker 07

  Yeah, there's actually a couple of specific flavors of overconfidence. And I think when you hear about them together, you see why it becomes such a disastrous cocktail. So the first is the thing that you and Paula are talking about, thinking that we're smarter, better, faster, stronger than the next person. The second is thinking that we are luckier than average. So people consistently overrate the likelihood of good things happen to them and underrate the likelihood of divorce, cancer, losing money in the stock market. So we think we're smarter than average. We think we're luckier than average. And then the third one is we think we are more prescient about the future than we actually

• 19:00Speaker 07

  are. So if you look at this cocktail, right, and you go, okay, we think we're better than other folks. We think we're luckier than other folks, and we think we know what's coming. That is a recipe for disaster. And Joe, the tricky thing about this, and most of the biases that we'll talk about today, is that they actually serve us really well in other facets of our life, right? I mean, if, if we weren't overconfident, I never would have approached my wife and, you know, in, in that class we were in together, no one would ever start a restaurant, like all these things, right? There's, there's places where thinking you're different or thinking that you're special lead us

• 19:40Speaker 07

  to do really, really special, important, positive things. It helps us get out of the, out of bed in the morning because we don't realize how, how ugly and stupid we are. And yet you see how disastrous it can be when it gets applied to investing.

• 19:56Speaker 00

  I'm just envisioning the train wreck, Jesse, when you meet with some people and how overconfidence, how do you help people pump the brakes on, you know what, maybe this area that serves you well in other areas of your life isn't going to serve you as well with your investments?

• 20:11Speaker 06

  I feel like you just missed a golden opportunity there, Joe. I mean, Daniel talked about how people are uglier and stupider than they think they are. I mean, come on.

• 20:19Speaker 00

  I wasn't gonna do that to you. Are you saying I am? Am I uglier, stupider? Oh, wait a minute.

• 20:26Speaker 06

  Well, it is. It is really hard because it's like, sometimes when I'm, when you're talking to someone and you recognize and You recognize some of these, you know, logical fallacies, say, or some of these, these ways that they see the world that you know probably just aren't true. Sometimes it can be really hard because, you know, we are, we're ignorant of our own ignorance, or we're blind to that, which we're blind to, you know, you can't see the picture if you're standing inside the frame. It's like, how do you explain to somebody that, what's the David Foster Wallace story? This is water? You know the story about the fish are swimming in water and they don't even know what water is?

• 21:01Speaker 00

  I don't. Daniel's nod his head. Paulo, you know it too? Am I the only guy that doesn't know this?

• 21:05Speaker 05

  I don't know the story precisely, but I've heard the, a fish doesn't know it's swimming in water. It's, this is just the environment.

• 21:11Speaker 06

  It's correct. That's the only world that the fish knows. And so I think there is something similar sometimes where it's like, hey, Danny Kahneman, and I think Daniel, you probably know this quote better than us. And Joe, maybe even you referenced it like last week on the show, I feel like where Danny Kahneman is famous for saying, despite all of his research about these fallacies and biases and ways in which our own brain tricks ourselves, he's like the most well researched guy on the topic. And yet he would say his brain was just as fallible to those biases as anyone else's. And so if Danny Kahneman is still falling prey to these biases, how is the average person off the street, not the average Joe, because we all know Joes are above average. But how's the average person supposed to?

• 21:56Speaker 06

  So it can be really hard. And I think sometimes it's just a matter of repetition and time and education and explaining and hoping in the long run that we all realize that we fall prey to them. And maybe we need to design systems in order to overcome, overcome these biases.

• 22:12Speaker 00

  And I love the foreshadowing because we're going to talk about some of those systems in the second half of today's show. Let's go to the second most popular game, Jesse. I'm just going to wait till it comes back. I can tell you the number of times back when I was a financial planner, well, and I, and I just remember one, I've told the story a couple of times. I had this gentleman that I was meeting with, and he had this Ford stock that was maybe worth a third of what it had been with over the years, about a third of his cost basis. I was telling him that the competent thing would be to, he still had enough money to track retirement. He just needed to turn that into a broadly diversified portfolio to get there. And he said, I will do that once it comes back.

• 22:53Speaker 00

  We did everything. We did everything, Jesse. I'm sure you've seen this too. I'll just wait till it comes back. What do you think's going on in your brain when you're thinking that?

• 23:01Speaker 06

  Sometimes I think it's simply confusion between the behavior that seems to govern the market as a whole versus the behavior that governs, in this case, like individual stocks. Now, what do I mean by that? Well, so far, at least in US history, the stock market as a whole always has come back, right? Stay the course. John Bogle, eventually the market comes back. You might have to deal with some pain in the interim, but eventually it comes back. So just stay the course. And that so far has been true for the market as a whole. But that is not true and never has been true on an individual stock by stock basis. There are plenty of stocks. You know, there's this funny saying about like, how does a stock

• 23:41Speaker 06

  lose 90%? And the answer is it loses 80% and then it gets cut in half again. Because if you do the math, that's how you get down to 90. Point being, like, it dropped 80% and someone out there was thinking, oh, it's going to rebound. And it doesn't.

• 23:53Speaker 00

  It's still going to go.

• 23:54Speaker 06

  It's still, sometimes it still goes down. Sometimes it does rebound, but with an individual stock, there's no such guarantee that it always comes back. And so I think some of that is, is people get confused by, you know, maybe just taking the behavior that governs the whole and thinking that behavior must also govern all of the constituent parts. And that's just not the case.

• 24:14Speaker 00

  Daniel, I agree with Jesse, but I also think there's something to be said for hope, right? This gentleman worked for Ford, so he hopes it's going to come back. There's also something to be said for, maybe I'm too close to it, so I know all the good stuff and I want to discount count the downsides. What's going on, do you think, when we say, I'm going to wait till it comes back?

• 24:34Speaker 07

  Yeah. So in the case of this gentleman, if he worked for it, we see that very, very consistently, we over invest in the things that we know, right? This happens at a national level. Americans are over indexed to American stocks. I lived in Canada for a season. Canada represents 4% of the world economy and like a very specific 4% commodity heavy, things like that.

• 24:59Speaker 00

  Natural resources.

• 25:00Speaker 07

  Yeah, exactly. The average Canadian. Investor, 4% of the world economy, 80% allocation to Canadian stocks. And we see this all over the world. Our brain is 2% to 3% of our body weight, but 20% to 25% of our caloric expenditure in a given day. And so one of the things that we do-

• 25:23Speaker 00

  Wait a minute, are you saying, I want to go back to the first question, which was overconfidence. Is your brain like, no, I'm way more important than everything else? So your brain's telling the rest of the body, no, I think I deserve it.

• 25:35Speaker 07

  Yeah, exactly. So we're always looking for ways to slip that brain into energy saver mode. And one of the things that we do is that we bet on the familiar, right? Whether it's stocks that are easier to pronounce have been shown to be over invested in, you know, brands that we recognize, the country that we live in. And what's actually crazy is we end up stacking our risks. Because if you work for Ford and then you're betting on Ford, right? Like you live in Detroit, you work for Ford, you're betting on Ford for your retirement.

• 26:08Speaker 00

  What could possibly go wrong?

• 26:09Speaker 07

  Yeah, it's like, you know, your real estate, your investments, your employment, all those eggs are in one basket. So going with what we know is one of the ways that we try and seek safety and try and put that brain in energy saver mode. And it's one of the riskiest things you can do.

• 26:27Speaker 00

  Does this come back to Paula? You know, you mentioned on the, I'm smarter than average, the overconfidence that that puts us in betting mode. Do you think I'll just wait till it comes back because I'm more, because I'm smarter than the average person? And I'm luckier, like Daniel said earlier, we all think that we're luckier. Is this, does that play a part in it too? Cause it's going to come back tomorrow if I just leave it alone.

• 26:48Speaker 05

  I think the, I'm luckier than the average person probably plays a role in it. But I think also loss aversion plays a big role in it. Because if hypothetically you had not owned that stock, that stock previously had reached some kind of a high, then it had fallen. And then you got into it at its current share price. You wouldn't necessarily be waiting for its previous peak. You would simply be benchmarking everything to the price at which you got in. But because you previously, your portfolio previously reflected that high, you feel the pain of that loss.

• 27:25Speaker 00

  Oh, yeah, yeah. Paula, let's stick with you because the third one, third and final one. And you've heard this one. We've talked about this one over and over, not just on stacking Benjamins, but on afford anything. This time Paula is different. You don't understand all those other times. Those you could go back in history and see how that would mess up. But this time's not like those.

• 27:43Speaker 05

  Yeah. You know what's insidious about this is that any given episode in history is in some way different, you know, it's not going to be a carbon copy.

• 27:53Speaker 00

  So they're not wrong.

• 27:54Speaker 05

  Of the last time. So I think the, the expression here is history doesn't, what is it? It doesn't repeat, it rhymes. Just because the details of something are different. And it can be very easy to over emphasize like, well, well, this time it's a pandemic and we, you know, we haven't had a pandemic since 1917. And so, and then we certainly had, you know, like the details are different. Absolutely. But the rhyming pattern is still the same.

• 28:22Speaker 00

  Is that what gets us, Daniel? Is that we get messed up in the details? And so it is different. So I shouldn't do the thing that was the right thing the last 27 times in a row.

• 28:31Speaker 07

  Yeah, well, and the thing is that humans are big on something called salience, right? Which is how vivid or how experientially loud something is in the moment. Paula gives a great example. We can read about the Spanish flu 100 years ago and draw parallels to COVID. But that's not the same as me being locked in my house with my kids screaming because they're on Zoom calls all day. And, you know, my, I have no toilet paper and whatever, right? Like that, all reading about the Spanish flu seems very remote compared to the viscerality of the thing that I'm going through. So I think that's a big thing. I also think, you know, it's a form of that ego, that, that overconfidence we talked about earlier.

• 29:15Speaker 07

  You know, the rules don't apply to me, or I see something that other people don't see. People love sort of esoterica. And I mean, this is where conspiracy theories come.

• 29:27Speaker 00

  I was just thinking that, yeah. We think we've got some information that the public doesn't have.

• 29:31Speaker 07

  Yeah, it's like you sheep don't see what I see, but I see something special here. And, and that makes us feel good.

• 29:39Speaker 00

  Jesse, Daniel mentioned the toilet paper. I totally forgot that there was a toilet paper shortage back in the day. Were you stealing people's toilet paper?

• 29:47Speaker 06

  That is a good transition. See, that's what the people come for, Joe. That's what they come for.

• 29:51Speaker 00

  That's why they're here. I wasn't going to call you ugly, but I would accuse you of stealing toilet paper.

• 29:55Speaker 06

  Now, my funny, I mean, it's neither here nor there, but my dad was a middle school biology teacher. So he has respect for, you know, the way diseases spread. So my dad emailed me a little after Valentine's Day. It was like the third week of February, 2020. And he's like, Hey, Jess, the CDC doesn't like the way that this virus is spreading. So you might want to, you know, get some beans just in case. And I was like, okay. And then sure enough, like three weeks later, here in the US, things shut down. So I had some toilet paper, Joe.

• 30:25Speaker 00

  Because you had some beans.

• 30:27Speaker 06

  And I had some beans, one and the same. But anyway, what's the real question, Joe? I know we're not here to talk about beans and toilet paper.

• 30:35Speaker 00

  This time is different. This time is different.

• 30:37Speaker 06

  Yeah, it is hard. I mean, I sit here right now, you know, last week, we did the AI episode. And I sit here and I'm like, man, I know on the one hand, I'm not supposed to sit here and say this time is different. And I was re-listening to the episode and Paula, I really appreciated, especially upon second listening, some of your explanation about like, yeah, people were saying the same thing when the internet came around. Like, all we can say right now is that, sure, the economy will change, but there are changes you can't even think about right now. And there are jobs and whole new classes of the economy that you can't even think about the way they'd be. Because that's what the internet did to us. And yet, part of my monkey brain is just sitting here going like, I don't know, this one feels different. So.

• 31:19Speaker 00

  I agree. I agree.

• 31:20Speaker 06

  It's really hard.

• 31:21Speaker 00

  And, and Daniel, you weren't here for that episode, but as the behavior guy on the show, I mean, you know, we published our AI episode on Friday, we recorded it on Monday, between Monday and Friday, OpenAI had this test agent locked in a room with no access. On its own, it found a security flaw. On its own, it figured out how to get itself on the internet. On its own, it went to a different company and found out the answer of what was true. I mean, it did all this stuff. And then in the back of my head, Daniel, I'm thinking, maybe this time is different. Maybe it is.

• 31:55Speaker 07

  I think one of the best things that we can understand here is separating the idea that this time is different, which it may truly be, from what does that mean for my portfolio? When the internet came around, was this time different? Yes. My gosh. I mean, think about how many ways we all use the internet every day. Does that mean pets.com was a good investment? It does not, you know? Has air travel revolutionized our lives? Absolutely. Have airlines been a good investment over time? They have not been. I'm going to sit here and say AI will be the most revolutionary invention in the history of humankind.

• 32:40Speaker 07

  I think it is absolutely different in one respect. And I could also safely say that 99.9% of the AI me too companies that are bandwagon companies, jumping on a hot moment are going to be, you know, obsolete in a few years and that we will be absolutely neck deep in AI. And that most of the investment vehicles that tried to take advantage of it will have sort of expired worthless.

• 33:09Speaker 00

  Look at the number of companies that now call themselves AI companies.

• 33:12Speaker 07

  Yeah.

• 33:12Speaker 00

  You know, same number of companies that decided that they were going to call themselves internet companies back in the day. Or when podcasting first took off and the number of people that all of a sudden had a podcast. You just see it with any of the booms. And by the way, one of my favorite quotes, Daniel was from, I think from Warren Buffett, who was like, if I ever tell you, I want to buy stock in an airline. You know that one?

• 33:31Speaker 07

  Yeah.

• 33:32Speaker 00

  Like something like, have me take two aspirin and call me in the morning.

• 33:34Speaker 07

  Yeah, like take me out back and shoot me. I think.

• 33:39Speaker 00

  Crazy. Hey, in the second half of today's show, Jesse, you previewed this for everybody. We're going to talk about what to do about it because we all have these biases. We all have these things going on our head. And I love Daniel, what you said earlier, you know, just because it might be different, might not mean that we do something different with our money. So how do we create this fence between our emotions that we're never going to stop? And the way we manage our financial decisions? We're going to talk about that, but in the middle of every episode, we take a break for our year-long trivia competition between our three frequent contributors, Paula Pant, Jesse Cramer and OG. And Daniel, today you're on team OG, which means good news and bad news. Would you like the good news first or the bad news?

• 34:21Speaker 07

  Always bad news first.

• 34:23Speaker 00

  Well, the bad news is that, and I hate this for our guest, is that you're gonna have to guess first, but that brings up the good news is because you're winning. So you're on the winning team, which is of course, what we wanted for you was to be a winner on the Stacky Benjamin Show, duh. And Doug, you've got the, you've got the score so far. How much is Daniel winning by?

• 34:44Speaker 04

  Daniel slash OG are winning by two points. So team OG slash Daniel have 10 points. Jesse has eight points and Paula has five points.

• 34:55Speaker 00

  So it was within one last week and Paula was on a tear. And I don't know Paula, the last couple of weeks. Don't end the streak Paula.

• 35:03Speaker 05

  Reversion to the mean.

• 35:07Speaker 00

  No.

• 35:07Speaker 07

  Joe, the reason I'm winning, having just joined is because I'm smarter, luckier, and more pressing about the future.

• 35:15Speaker 04

  Better looking.

• 35:15Speaker 00

  We're about to see how that holds up. Jesse?

• 35:17Speaker 06

  Two quick thoughts. First, a congratulations. So OG has more points than the average American has windows in their house. That's pretty cool. And then the second thought is, well, if we want to be more cordial to Daniel, how about Daniel plays for Paula, so he can go last. And Paula, you can play for me, so you'll go second. And I'll play for OG, so I can go first.

• 35:38Speaker 00

  Oh, you'd never throw that one. You would never.

• 35:41Speaker 04

  I cannot allow it.

• 35:42Speaker 00

  What could go wrong there? Yes. It goes wrong enough already without that Jesse. Doug, you've got the question. What are we talking about this week?

• 35:50Speaker 04

  Sure do. Hey there, stackers. I'm Joe's mom's neighbor Doug. On this date in 1715, a Spanish treasure fleet carrying gold, silver, jewels, and cases upon cases of bootleg DVDs sailed straight into a hurricane off the coast of what is now Florida. More than 300 years later, treasure hunters are still recovering coins and artifacts from those shipwrecks. Much like Joe's mom's still recovering her sanity after that little ATM incident back in 09.

• 36:19Speaker 00

  Oh, wait a minute. Whoa, we don't talk about that incident.

• 36:23Speaker 04

  Oh, man, you're right. I'm, yeah, you're right. I'm so sorry, Joe. That really sets her off. So here's today's Friday trivia challenge. How many ships were in the legendary Spanish treasure fleet when it left Havana? I'll be back right after I help grab some cold compresses for Joe's mom. I mean, she still starts shaking whenever that ATM incident's brought up. And I'm hoping she really didn't hear me. I mean, I hope she didn't. I mean, I didn't mean to talk about the ATM incident out loud again because she hates it when I say ATM is, oh my God, I can't stop doing it. Oh, you know, just, you know, with that thing I keep talking. I'm sorry.

• 37:01Speaker 00

  I think you just gotta let it go, man. Let it go. So mom can let it go. All right, Daniel, we've got the, the Spanish treasure fleet leaving Havana, Georgia on today's Havana, Georgia.

• 37:14Speaker 06

  Eight lanes through Havana, Georgia.

• 37:18Speaker 04

  They raided the strip mall in Havana, Georgia.

• 37:22Speaker 07

  Please deduct your point from Joe's team for that.

• 37:24Speaker 00

  Yes. I'm already at negative 10. What do you think? How many?

• 37:29Speaker 07

  Uh, this is light work, Joe. It's three. The answer's three.

• 37:32Speaker 00

  The Nina, the Pinta.

• 37:41Speaker 00

  Maybe slightly different.

• 37:42Speaker 07

  Yeah.

• 37:43Speaker 00

  Jesse, Dr. Daniel says three. What do you got?

• 37:47Speaker 06

  Well, Dr. Daniel would be proud of me because the reason I snuck in that eight lanes through Havana, Georgia was to anchor him to a lower number eight. No, I'm kidding. That would be pretty funny though. I'm going to guess higher because some I'm just thinking of a fleet of boats. It's gotta have more. I'm going to go with, uh, lucky number 22. Lucky number 22.

• 38:09Speaker 00

  22. Wow. We're all over the map, Paula. We got three. We got 22.

• 38:17Speaker 05

  Hmm. Okay. So three also popped into my head first exactly because of the Nina Pinta, Santa Maria. And then I was like, well, maybe it would be a few more than that. So then I was thinking five, but then I was like fleet, fleet implies, and I was imagining a Game of Thrones and like that scene where Khaleesi is crossing the ocean and she's got all the ships.

• 38:41Speaker 00

  All those ships.

• 38:42Speaker 05

  Right? Yeah, exactly. And so then the number that popped into my head was 17. I might just go straight down the middle. 22 plus three divided by two is like 12.5. So, um.

• 38:59Speaker 00

  Somebody was stuck on a point five ship. I didn't want to be that guy.

• 39:03Speaker 06

  Give me one. I was gonna say one canoe.

• 39:07Speaker 05

  So I guess I'll go 12.

• 39:11Speaker 00

  We've got three, 22 and 12. We are all over the map, people.

• 39:18Speaker 00

  Is three a fleet? Is 22 nearly enough? Is what happened to the people on the half of a ship that Paula just got rid of? We'll find out in just a moment. We'll be right back.

• 39:31Speaker 00

  Well, you may know that chaos is the name of the game here in mom's basement. What with guests coming in and out, Cooper the cat getting in the way, Doug being, well, being Doug, the holidays make it even worse because it's all about food and big meals. And the problem is prepping for those takes forever. But what about those between meals, right? The meals between those huge, huge bookends? Well, that's where factor comes in. Factor is made with high quality ingredients that you recognize and trust with over 175 banned ingredients. You always know you're eating something that's good for you, even when you don't have time. It's ready in two minutes, whether it's lunch between meetings or dinner after holiday shopping.

• 40:15Speaker 00

  Factor requires zero prep, cleanup, or effort from you or mom. So you can focus on everything else in your day. Factor even has heart smart options like the green goddess barramundi with tomato, rice, peas, kale, and green beans, or the enchilada style chicken and sweet potatoes. Those are so good. They're crafted with lean proteins, fiber packed fruit and veggies and healthy fats. Try those out. Your heart and your taste buds will thank you. For Cheryl and I, factor has been a great way for us to stay busy and focus on family life and beating mom at card games. I use factor and you should too.

• 40:59Speaker 00

  So let's eat real stackers. Head to factormeals.com/sb50off. Use code sb50off. And you know what? You're going to get 50% off and one free breakfast item per box for one year while supplies last until December 31st, 2026. That is code sb50off at factormeals.com, sb50off at factormeals.com. See website for more details. There is a financial conversation that's coming to millions of American families, and there's a pretty good chance nobody wants to be the person who starts it. Inheritance. And here's why that matters. An estimated $124 trillion to heirs in charity

• 41:43Speaker 00

  is expected to be transferred by Americans over the next 20 years. It's an extraordinary amount of money, but Kiplinger's research found that 51% of adults and their parents, get this, never talk about money. And there's a pretty big disconnect. 47% of parents expect to leave a meaningful inheritance, while only 24% of adult children expect to actually receive one. Nearly 30% of parents don't even have a will in place. Maybe it's time we talked. Kiplinger calls it "the trillion dollar talk," a conversation about inheritance, estate planning, wills, and the questions families should be asking before those decisions

• 42:24Speaker 00

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• 42:43Speaker 00

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• 43:25Speaker 00

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• 44:10Speaker 00

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• 44:42Speaker 00

  All right, Daniel, you kicked us off with three and both Paula and Jesse went, nay, nay, it's gotta be more than that. You feeling confident?

• 44:50Speaker 07

  Um, yes, but only for the stupid reasons we've talked about earlier in the show.

• 44:57Speaker 07

  None of it warranted, none of it warranted.

• 44:59Speaker 00

  Because you're smarter and better looking and right. Yes. Jesse, you're up there at the top at 22. If Paula's right, and it is a packed harbor of ships, well then, you know, you've got 100 on your side.

• 45:12Speaker 06

  I've got the upside. I mean, how many thousands of ships were in the Spanish Armada? I don't know.

• 45:17Speaker 00

  Spanish treasure fleet. Paula, 12?

• 45:21Speaker 05

  I guess I've painted myself into kind of a narrow bucket, but I mean,

• 45:25Speaker 00

  You truly did.

• 45:26Speaker 05

  Yeah. But you know what? A dozen is divisible by two and three and four and six. So, you know, I've got some stuff going for me.

• 45:35Speaker 00

  As I always say, Paula, you can't be wrong. 83 out of the 87 times you've tried, you can't be. Doug, who's going to win this thing?

• 45:49Speaker 04

  Hey there, stackers. I'm retired Spanish Admiral and guy who's not sure why he's been told not to captain anything larger than a shopping cart, Joe's mom's neighbor Doug. Before the break, I asked our contributors this question: How many ships made up the 1715 Spanish treasure fleet when it left Havana, Georgia? And here's the amazing part: Almost all of the ships were driven ashore by a hurricane off Florida's coast. Thousands of gold and silver coins, emeralds, and other treasures were scattered across the ocean floor. And more than 300 years later, treasure hunters are still finding artifacts from the wrecks. While Joe's mom is still discovering new bank fees from that you-know-what adventure, wink, wink, some things just take a while.

• 46:34Speaker 04

  Anyway, how many ships were in that treasure armada? We got some pretty creative guesses, but the correct answer is nine more than what Daniel guessed, 10 fewer than what Jesse guessed, and exactly zero more or less than what Paula guessed, because the answer is 12 ships. Paula gets like 100 points for being directly on the answer. And now, speaking of people who know how to navigate life storms a little better than 18th-century Spanish captain, here's Joe.

• 47:04Speaker 00

  Easy.

• 47:05Speaker 05

  Wow.

• 47:06Speaker 00

  Slightly better. Paula Pant, what are you doing?

• 47:09Speaker 05

  Insanity. Insanity.

• 47:11Speaker 06

  Who was Paula playing for? Were you playing for yourself, Paula? Did we settle that?

• 47:15Speaker 07

  That's gotta be worth five points.

• 47:19Speaker 05

  Well, you know, really, the answer was wisdom of the crowds, because I just took your two answers and averaged them.

• 47:24Speaker 00

  You know how, Daniel, an eclipse happens only once every... or better yet, like Halley's Comet, only, like, you gotta be outside on the right night, and it has to be clear?

• 47:33Speaker 07

  Yeah.

• 47:34Speaker 00

  You were here for that. Like, Paula Pant won, and that just...

• 47:37Speaker 07

  There's behavioral lessons. Paula just named it, the wisdom of the crowd. We see that again and again, and we had some interesting anchoring, we had some representativeness, heuristic. I was absolutely thinking of the Nini of Panth...

• 47:52Speaker 07

  I love that Joe called me on.

• 47:56Speaker 00

  I didn't even see the, oh God, no. Look at your eye when I called that out. Well, that's, that was a fun one, Doug. Thanks for the trivia. Let's get back to this. Yes, Doug.

• 48:06Speaker 04

  I need to go on record here before we continue on. I've just texted OG that we're awarding Paula five extra points. We're getting it exactly right. So if you see me like in a cloud of smoke, my phone has exploded because of OG in a rage texting me.

• 48:25Speaker 00

  Yeah, I was gonna, and I don't even want to see the basement Facebook group on Monday. If, if that happens. I mean, the discussion Jesse Cramer started with windows last week. Oh my goodness. I don't know if you saw it, Paula, but we had about 187 people telling us how many windows they had in their house.

• 48:41Speaker 05

  Wow.

• 48:43Speaker 00

  Which Daniel is great. You know how we're spreading like financial literacy all the, all the time? Never any discussions of stacking Benjamins around that. But how many windows are in your house? That's what our stackers really come to roost on. Let's come to roost on this. If our brains are wired this way, are we doomed? Right? Is there any fight back? And I'm hoping Paula, the answer is no. So let's talk about what we can do about it. If we know we're fighting against our brain, Jesse mentioned some systems. What's a, what's a good system to get between you and your emotional, you know, dysfunction?

• 49:19Speaker 05

  There are, so there are two things that I really like. One is having a pre-written set of rules or like a, I know you call it an investor policy statement. I've, recently I've started calling it a code of conduct. Having a pre-written code of conduct that says, these are the parameters under which I actually make changes. These are the guardrails. So that's one thing. But then the other is having a threshold above which you need a financial advisor or a financial coach or like some third party, somebody who is not your spouse or partner, some outside independent third party to sign off on that decision.

• 49:57Speaker 00

  How effective, Daniel, I'm sure you've studied this, you've studied all this stuff, is having that person that you bounce ideas off of, is that worth, you know, in these personal finance forums, you see, get rid of the fees, right? Get rid of these people. How effective are the people? Are they worth the fee?

• 50:14Speaker 07

  Yeah, so there's really three legs to this stool, if you ask me, and I call it the three Es. The first is education, right? You need to know enough about this to be dangerous. You need to listen to shows like this. Education is the first piece, but education is actually a really weak predictor of behavior. My favorite stat about this is that nurses smoke cigarettes at like double the rate of the general population.

• 50:40Speaker 00

  That's incredible.

• 50:41Speaker 07

  And you know, there's not, there's not a nurse you could talk to that would tell you that smoking cigarettes is good for your health, right? They, they have the education, they lack the behavior. So, education necessary, but not sufficient. The second one of these is environment, right? This is everything from the automation that Paula's talking about, to just having the right mix of assets to make sure the ride is one that you can take. And then the third is encouragement. People who work with financial advisors do better on average in a very meaningful way. They're more prepared for an emergency. They're happier, they have better marriages on average. This is one of those things between price is what you pay and value is what you get. Most advisors are very good.

• 51:24Speaker 07

  I would say that most are worth the fee. Not all, there are certainly some bad actors. Money is one of these things that touches every part of our lives. And if you can take that off your plate and you can get the right person in your corner, it tends to raise a lot of boats.

• 51:42Speaker 00

  Jesse, I wasn't gonna ask you that. Jesse, is it worth hiring you?

• 51:47Speaker 06

  Not always.

• 51:48Speaker 00

  I would love to have to, Jesse, go, yeah, no, I don't think so. What I want to ask you about though is the other side of that, which is Paula mentioned the investor policy statement, the investment policy statement. How do you feel about that?

• 51:58Speaker 06

  I'm a big fan. I'm a big fan of getting things down in writing and it doesn't have to be anything, it doesn't have to be highfalutin, it doesn't have to be complicated, it doesn't have to be wordy. It's just, it's that, going back to a behavioral idea, it's that commitment consistency principle. Where if you commit to something and sometimes it means saying out loud, or sometimes maybe it means writing it down. My understanding, and Daniel, I'll look to you to correct me, but this is, I think, from Robert Cialdini's book Influence, is, once you commit to something, most of us, maybe not all of us, but most of us have a hard time thinking of ourselves as a liar. So, once we commit to something, we want to be consistent so that we can refer back to our previous selves and say, yeah, my behavior is consistent with the way I used

• 52:43Speaker 06

  to be, that thing I used to say, or that thing I wrote down. And so, once you write down this simple investor policy statement, code of conduct, 10 commandments, whatever you want to call it, you are likely to follow up and be more consistent with those, with what you previously wrote down. But it's funny, Joe, when you mentioned the idea of hiring me, I've got a couple of really good buddies who are CFP, financial planners, yada, yada, yada, and they've recently hired their own financial planner, another trusted person in the industry.

• 53:11Speaker 00

  Sure.

• 53:12Speaker 06

  Because even they recognize, they're like, you know what? I might be a financial planner, but sometimes my spouse, you know, she doesn't see eye to eye to me on these things, and we need a neutral third party. Or, I come in with certain biases about the way I think money ought to work, and I want a trusted third, neutral third party to be that outside source. You know, again, you can't see the picture if you're inside the frame. So, I think it's very interesting, and I find it actually very compelling, the fact that there are some financial planners who I really, really respect, and they've hired their own financial planner to help them be that, that third party.

• 53:46Speaker 00

  For the vast majority of my life, I've had a separate outside financial planner, and not just for me, but also because Cheryl's heard my crap forever. And if I say, let's do something, she's like, yeah, whatever. But if my financial planner says it and hasn't talked to me ahead of time, it just goes, hey, let's do that. And I also like having somebody to argue with, frankly, you know? Having somebody, I mean, in a good way, they're on my team, I know that they want what's best for me, and if they see a different path to get there, how great is that? Daniel, what's another way that we can get between us and that lizard brain?

• 54:22Speaker 07

  Anything that you can do to make your biases work for you is a good thing. What do I mean by that? My son is a martial artist. And one of the ideas from martial arts that I really love is the circular theory of self-defense. So if Joe is attacking me, as he sometimes does, and he's throwing a punch and he's throwing a punch.

• 54:47Speaker 00

  This happens regularly.

• 54:48Speaker 07

  Yeah, any given Tuesday. If he's throwing a punch at me, I don't want to block the full brunt of that punch. I want to roll with that resistance and let his exertion work against him. It's like Jesse talked about with the Danny Kahneman thing, right? If Nobel Prize winners can't be introspective enough to get past their own ego, what hope do any of us have? But if you talk about the automation that Paula talked about, right? It rests on the reality that human beings are lazy, forgetful, and status quo prone.

• 55:27Speaker 07

  It's the reason I have an HBO account that I forget about every month and just keep paying and never using, right? I can take that same tendency to be lazy, stupid, and status quo prone. And if I automate my retirement savings, then I can make my laziness and my status quo proneness work for me, right? There's other research, you know, we've talked about being emotional and how that can wreck a plan. There's also research that shows that people who are tying their investments to something personal, like a picture of their children, save more and are less likely to panic, right? That's totally irrational, but I will absolutely do it, right?

• 56:11Speaker 07

  I'll take that emotion and make it work for me as surely as it can work against me. So anything you can do to take your biased brain and make it work for you, I think is the best thing you can do.

• 56:25Speaker 00

  It's funny you mentioned tying it to something emotional. I would try to ensure back when I was a planner, Daniel, that we would get really, you know, I'd find out how emotional people were about their goals and I would make the goals, what if we make it, what if we don't make it? And then tie money to the goals. So this is why bucketing, even though, you know, the scientist nerds in our group will go, well, bucketing is really inefficient. It's inefficient until your brain wrecks your plan. But man, in so many cases, people didn't even reference, Daniel, the index fund we were in. They would say, how's my vacation house fund doing? How's my retirement fund doing? How's my whatever fund doing? Like, it was always the goal versus what we were invested in.

• 57:08Speaker 07

  Yeah, haters will always poo poo things like bucketing because money is fungible. And that's true, but it has nothing to do with the way that we think about it. We think about money in buckets. People with a safety bucket have been shown to be 10 times less likely to panic in a choppy market. Right? Money is fungible. Maybe that six months of income is not optimally allocated from a spreadsheet perspective. But we aren't spreadsheets. We're people. We're flawed and we think that way. And so I think it's better to be honest about who you are and what you're dealing with.

• 57:48Speaker 07

  And own a little bit of suboptimality to avoid against a boatload of suboptimality.

• 57:57Speaker 00

  Like the greater good.

• 57:58Speaker 07

  Yeah.

• 57:59Speaker 00

  Yeah. All right, let's finish this with a game. I want to play one game to make sure that we've got this and to kind of help our stackers internalize it. We're going to call this game, Is My Brain Lying To Me? And Doug, I got good news for you. You don't have to be the one in the seat like you are on Monday and Wednesday.

• 58:14Speaker 04

  You're kidding me. This is awesome. Oh, my God, I was terrified of this moment. Now I'm loving it.

• 58:21Speaker 00

  Paula, is your brain lying to you? And the answers are going to be true, false, or it depends. So Paula, your brain says, Paula Pant's brain goes, I should wait and make this move when the market settles down. Is your brain lying to you?

• 58:35Speaker 05

  Yes, true.

• 58:37Speaker 00

  How come?

• 58:38Speaker 05

  Uh, because time in the market is more important than timing the market. Assuming that you are contributing consistently, you don't wait for the market to settle down. You ignore what the market is currently doing and just invest periodically. Or withdraw periodically, but you do it at fixed intervals rather than based on what's happening.

• 59:00Speaker 00

  We do this live on YouTube and stacker Drew said he votes that Doug asked the questions. We, I didn't even think we should have planned that ahead of time, Doug. All right, Daniel, your brain lying to you, true, false, it depends. Your brain goes, ah, I missed this rally. You get a, you get a sum of money, you're about to invest it. You're like, ah, I missed the rally, so I shouldn't do it.

• 59:24Speaker 07

  Yeah, your, your brain is lying to you. The, the answer is your brain is lying to you on all of these, but.

• 59:33Speaker 00

  Spoiler, you gotta say spoiler.

• 59:35Speaker 07

  Just to ruin the game for everybody. No, your, your, your brain is lying to you. There's a concept from Howard Marks that I refer back to a lot, which is called the perversity of risk, which is this very sort of cruel thing that when it feels like the market is safest, it's actually most dangerous and the reverse is also true. And so the way that we are wired with respect to how we feel about a rally or, or a depression or something like that is, is 180 degrees off. So it's, it's hard to get that right at an intuitive level.

• 1:00:11Speaker 00

  Just because you said that, Daniel, I'm putting one in here where your brain's not lying to you. Just, just because, Jesse, Jesse, your brain says, I've already lost too much to sell my Six Flags hypothetically.

• 1:00:27Speaker 06

  Ah, I see, I see. Like Six Flags, yeah, you're, you're referring to the earlier story. Uh, your brain is lying to you because, well, like we talked about earlier, there's no guarantee that Six Flags will come up, will come back up. And I think in those cases, as hard as it might be, you essentially have to forget the past and make a decision in the present moment with the information you have on a forward looking basis. So your brain is lying to you about the way that Six Flags is not like a roller coaster at Six Flags. It does not always come back around. Sometimes you, you just fall off the roller coaster.

• 1:01:04Speaker 04

  More like the hot dogs and elephant ears that you buy at Six Flags, which do come back around.

• 1:01:12Speaker 00

  That is, that is a truth.

• 1:01:13Speaker 06

  What is an elephant ear?

• 1:01:14Speaker 04

  That's the fried dough.

• 1:01:16Speaker 06

  Oh, fried dough, got it, got it, got it. I just haven't heard that. I'd never heard that noun before.

• 1:01:22Speaker 07

  Joe, are we, are we inviting uncultured people on the show?

• 1:01:26Speaker 00

  What's an elephant ear? What are we doing here if we don't know what an elephant ear? Paula, you know what an elephant ear is.

• 1:01:32Speaker 05

  I, I assume that it was a funnel cake when he said it.

• 1:01:35Speaker 00

  Funnel cake?

• 1:01:35Speaker 05

  Yeah.

• 1:01:36Speaker 00

  You can tell which zipco Paula grew up in. She calls it a funnel cake.

• 1:01:40Speaker 04

  That's the highfalutin. She probably had Aspic as a palate cleanser during her nightly meals.

• 1:01:46Speaker 00

  It isn't mustard. It's Grey Poupon. I mean, come on. Right. Funnel cake. Wow. Uh, who are we on? Oh, Paula, speaking of you, here we go. Paula, this is the same thought you have every week with trivia. I'm due for a winner.

• 1:02:04Speaker 05

  I have to say with trivia, because the questions are designed to be essentially won randomly. It would make sense that over a long period of time, I would accrue about one third of the wins.

• 1:02:16Speaker 04

  You would think.

• 1:02:17Speaker 05

  My, my losing streak has, it has gone on so long, it is statistically improbable.

• 1:02:23Speaker 00

  You're developing a boomerang. You're developing a boomerang.

• 1:02:28Speaker 05

  So what was the question? It was, I'm due for a win?

• 1:02:30Speaker 00

  I'm due for a winner.

• 1:02:33Speaker 05

  Brain is lying to you because it assumes, all right, if you flip a coin a hundred times and it's a fair coin and all 100 times it lands on heads, you might think that time number 101 is either, depending on your orientation, more likely to land on heads in order to maintain the pattern. Or you might think I'm due for a winner, so it's now time to land on tails. But what's actually true is that flip number 101 is independent of all previous 100 flips. You're not more likely to land heads just because it continues the pattern,

• 1:03:16Speaker 05

  nor are you more likely to land tails because you're due for a winner, right? Like that 101st flip is totally independent of what has preceded it. For that reason, your brain is lying to you.

• 1:03:27Speaker 00

  Last one, Daniel. If I just hold the stock fund long enough.

• 1:03:32Speaker 07

  That's it. If I just

• 1:03:33Speaker 00

  That's it.

• 1:03:34Speaker 07

  If I just hold this

• 1:03:35Speaker 00

  If I just hold it long enough, things might be down now, but if I hold it long enough, it's going to be great.

• 1:03:40Speaker 07

  Well, I think it depends. I think Jesse's point earlier, I mean, if it's Six Flags, if you've bought Six Flags because you're a Travis Kelsey fanboy, I think that's not guaranteed. I think if you bought the S and P.

• 1:03:53Speaker 00

  But you're thinking it probably would go up, though. Probably would go up.

• 1:03:56Speaker 07

  I think if you bought the S and P, it's a pretty safe bet on a long enough timeline, but things can stay goofy for a long time. Though that's what history tells us.

• 1:04:04Speaker 00

  Okay. So the closest I could get to your brain not lying to you is it depends. But we got close. We got close.

• 1:04:09Speaker 07

  Well, what if your brain says, Joe, you're a kind and a special person and you're worthy of love? Is your brain lying to you, Joe?

• 1:04:16Speaker 00

  My brain is wicked smart.

• 1:04:20Speaker 04

  I feel like this whole episode was really just a vehicle to give Joe stock advice on his Six Flags.

• 1:04:27Speaker 07

  Feel like that.

• 1:04:28Speaker 00

  Which Doug, you think is a great idea, don't you? Don't you think that's

• 1:04:31Speaker 04

  It's as good as my Rivian investment. Yeah.

• 1:04:35Speaker 00

  Rivian was good for a while until it wasn't. All right. Thanks to all of you for contributing and I think we helped a lot of stackers get better with their money and realize that, you know what, our brain's never going to slow down chattering and putting that system or systems in place. Automation, investment policy statement, maybe other people between us and our money, some great strategies to make sure that we don't act on that advice. I love, Daniel, what you said especially, which was just because it's a good thing, doesn't mean or a bad thing, or it is different, doesn't mean it's a great investment. It doesn't mean I should change my investment strategy. Shane, by the way, hanging out with us on YouTube, and by the way, thanks to everybody hanging out with us on YouTube, says he was just about to talk about your Rivian investment, Doug.

• 1:05:21Speaker 00

  So even even stacker Shane, by the way, if you want to hang out with us while we make the show, that's Mondays. I love pretending it's Friday on a Monday. So Monday afternoons at 3:30. Eastern time generally ish, we're on between 3:30 and 3:45. All right. That's going to do it for today, except this, we got to find out what all you brilliant people are doing. Daniel, let's start with you. Thanks for hanging out with us, man. Good seeing you again.

• 1:05:45Speaker 07

  Yeah, you too.

• 1:05:46Speaker 00

  So the book comes out again on your, I love how you got to manufacture like this celebrations for your birthday. Are we at that age now where we just got to come up with our own birthday cake and ice cream?

• 1:05:57Speaker 07

  But when the royalty check hits on the birthday, it's like a little, it's a little more icing on the cake, brother. That's what, that's what we're going for. I mean, and a little more icing. Let's be honest.

• 1:06:08Speaker 00

  Yeah. So October 16th, I didn't write that. It's October 16th.

• 1:06:11Speaker 07

  October 16th. Yep.

• 1:06:12Speaker 00

  Yes. And the book is called?

• 1:06:14Speaker 07

  The Behavioral Investor.

• 1:06:16Speaker 00

  And can we preorder it?

• 1:06:18Speaker 07

  Well, it's, this is a second edition. So if you want the old one, you can get it now. But yes, you can preorder the new one as well.

• 1:06:24Speaker 00

  Yeah. Who wants the, what's the difference between the first edition and second edition?

• 1:06:28Speaker 07

  So there's updates to all the chapters, but there's a brand new chapter on how practically to apply this to a specific asset allocation that optimizes anxiety adjusted returns, you know, kind of like we talked about today. A lot of times we're trying to optimize spreadsheet returns. I'm trying to optimize returns for real people with real brains who make poor decisions from time to time.

• 1:06:51Speaker 00

  I bet it was fun going back and just reading through it.

• 1:06:54Speaker 07

  Ah, it's been a blast. I'm writing books is the least lucrative and most fun thing I do. It's my favorite part of my career.

• 1:07:04Speaker 00

  I think you and I first met around version one.

• 1:07:09Speaker 00

  Around the first time. So we got to have you back again this fall to dive deep again, because it's been quite a while. Paula Pant, what's going on at the Afford Anything Podcast, my friend?

• 1:07:18Speaker 05

  Oh, on the Afford Anything Podcast, we recently had Cody Berman on the show.

• 1:07:22Speaker 00

  Cody.

• 1:07:23Speaker 05

  Cody. Yeah. He retired in his twenties, retired, meaning hit financial independence in his twenties. He did so by hustling a lot. He basically tried every idea that was out there. He tried them all and then stuck with the ones that worked and kept his cost of living ridiculous. ridiculously low while making a bunch of money as an online entrepreneur. So he talks about various paths that a person can pursue if they want to reach financial independence. He discusses this concept of net worth phi versus cash flow phi, basically judging the size of your portfolio versus the actual amount of like residual income that's coming in every month. So that is on the afford anything podcast.

• 1:08:05Speaker 00

  It's amazing that a guy as young as Cody is can talk so with so much authority on so many different things because he has tried. Yeah. So he's like a human guinea pig.

• 1:08:14Speaker 05

  Yeah, yeah.

• 1:08:15Speaker 00

  He's just an awesome guy and he's on the afford anything show. Awesome podcast. Speaking of awesome podcast, how about that personal finance for long-term investors, Mr. Kramer? What's going on there?

• 1:08:25Speaker 06

  Well, uh, July's shaping up, I think, to be our best month ever. So that's, that's kind of cool. And this past week, depending on when this episode comes out, we released an episode.

• 1:08:36Speaker 00

  Best, best ever means best content, right? Means like

• 1:08:40Speaker 06

  All of the above.

• 1:08:40Speaker 00

  Best stuff.

• 1:08:41Speaker 06

  All the above. It's just, you know, things are just, you know, I'm a lucky guy. What can I say? Lucky, lucky, lucky. Things are good. We've released an episode recently, what your brokerage statement doesn't tell you. And then next week, we have an episode, we have another ask me anything episode coming out.

• 1:08:56Speaker 00

  Awesome. And people actually do. They ask you anything.

• 1:08:59Speaker 06

  They do. Usually it's financial planning related, but I will say when episode 150 comes out, it's going to be all personal questions. So we're mixing it up once every 150 episodes.

• 1:09:08Speaker 00

  Oh my goodness, 150 coming. I can finally ask you boxers or briefs?

• 1:09:12Speaker 06

  You can, you can, Doug.

• 1:09:14Speaker 00

  All right.

• 1:09:14Speaker 06

  My answer won't change though.

• 1:09:17Speaker 00

  What is it? Is it that I just, I need to, is it all the above? Neither? Like

• 1:09:22Speaker 06

  Well, it's like, remember that show, this is a deep cut. Remember that show from Netflix? Like 10 years ago about that guy in Northern Wisconsin who was embroiled in a very contentious, unfortunate crime. And part of the issue was the crime was one of the victims of the crime claimed about how she ripped his underwear. And upon further investigation, the accused man didn't own any underwear. And that was part of the reason why he was acquitted. Anyway, that's what it made me think of that.

• 1:09:50Speaker 00

  I don't know that.

• 1:09:51Speaker 04

  I don't, but I want to go watch it now.

• 1:09:53Speaker 00

  And Daniel's like, my God, what are we still doing here?

• 1:09:55Speaker 07

  See, I would have, I would have thought he would have known about the elephant ears, given the taste in TV. Like I just see, it seems like you're one of my people, Jesse.

• 1:10:05Speaker 06

  I binge watch Netflix and eat elephant ears.

• 1:10:07Speaker 07

  Yeah. I mean, it just seems like you, you're my guy. You're my people.

• 1:10:11Speaker 00

  That's on the Personal Finance for Long Term Investors podcast, also where the finest podcasts are found. All right, everybody, that's going to do it for today, except this. Doug, what should be on our to-do list after today's show?

• 1:10:24Speaker 04

  Well, Joe first takes some advice from his Royal Highness, Third Earl of Hanover, Dr. Daniel Crosby Esquire. Don't let one bad decision take you off your game plan. Stay confident and pay your T-Mobile bill. Those guys play hardball. Second, want to protect yourself from yourself? Well, just like our VP of HR Paula Pant says, obey your investing code of conduct. Then give yourself three demerits and put yourself on a performance improvement plan if you violate it. But the big lesson,

• 1:11:01Speaker 04

  when Joe's mom says the quote, "Spanish treasure fleet is here," remember, she's talking about the ladies pulling in for her poker night. You do not want to see that look on her face, by the way. She's maniacal.

• 1:11:15Speaker 04

  Thanks to Dr. Daniel Crosby for joining us today. You can preorder his upcoming book, The Behavioral Investor, wherever books are sold. We'll also include links in our show notes at stackingbenjamins.com. Thanks to Paula Pant for hanging out with us. You'll find her fabulous podcast, Afford Anything, wherever you listen to the finest podcasts. And finally, thanks to Mr. Jesse Cramer, Mr. Jesse, okay, missed, we're going with it. Mr. Jesse Cramer for joining us today. You'll find his filthy podcast, Personal Finance for Long Term Investors, wherever you go for podcasts. Think for a minute, stacker, where are you now? Here's what's cool. You can find Jesse and Paula in that same spot. It's super easy.

• 1:12:01Speaker 04

  This show is the property of SB Podcast LLC, copyright 2026, and is created by Joe Saul Sehi. You'll find out about our awesome team at stackingbenjamins.com, along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello. And oh, yeah. Before I go, not only should you not take advice from these nerds, don't take advice from people you don't know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I'm Joe's mom's neighbor Doug, and we'll see you next time, back here at the Stacking Benjamin Show.

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