061 - Dr. Daniel Crosby: Boating and Selfies Are Dangerous, Investing Is Not
Do you know the biggest misconception about investing? New York Times best selling author Dr. Daniel Crosby joined Emily Binder to talk about the psychology of money. Many investors are mistaken that success in the markets is about being analytically minded, but it’s actually more about self control.
So yes, C.R.E.A.M., but emotion rules cash. Daniel shares the three legs of effective investing and why education alone isn’t enough to save us from investing mistakes or weight gain. (Yes, the two are linked.)
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Daniel Crosby, Ph.D is author of The Behavior Investor and host of Standard Deviations
Guest: Dr. Daniel Crosby is an Atlanta based psychologist and behavioral finance expert who helps organizations understand the intersection of mind and markets. A New York Times bestselling author, his most recent book is The Behavioral Investor. Dr. Crosby is Chief Behavioral Officer at Brinker Capital.
Timestamps and topics:
02:00 Daniel’s background: trained in clinical psychology then searched for non-clinical applications of psychology, stumbled on behavioral finance: the intersection of the mind and the markets
02:50 What do people most misunderstand about investing and their money?
03:20 “My business is full of human behavior” -Daniel’s father, a financial advisor for forty years
4:00 Many people think that success in the markets is about being analytically minded… when in reality the most successful investors have one thing in common: being able to control their own emotions. See Buffett.
4:15 It’s quite easy to be okay or good at investing
04:40 Cognitive errors
05:00 Our brain is wired to keep us alive long enough to pass on our genes, not to achieve excellence
05:25 The ways our brains betray us and hurt our investing: Our ego (especially a problem for men: see Consider Firing Your Male Broker by Blair duQuesnay), emotion, conservatism, and attention (tendency to confuse what’s easy to recall vs. what is probable)
Taking selfies is riskier than investing.
06:20 Example of attention leading us astray: People are very afraid of sharks but not of taking selfies, even though the latter has a higher death rate. Attentional bias for the vivid.
07:13 People think investing is risky even though over any given fifteen year period in history you couldn’t have lost money while invested in the general stock market
07:30 Multi-asset class diversified investing is much safer than, for example, taking selfies or boating, but we don’t perceive it this way
Boating is riskier than investing.
08:20 We tend not to answer the complicated question but to substitute: so we ask, “is this enjoyable?” And investing isn’t fun, but boating is fun. So instead of answering “is this risky?” we answer the question “is this enjoyable?” And then boating seems safer than investing.
10:25 It’s more complicated than just having an advisor help you.
The three legs of good investment decision making:
Education: learn about stocks, bonds, accounts
Environment: your portfolio - well-diversified that won’t scare you to death
Encouragement: good advisors to slap the bad decision out of your hand before you make it
11:00 Self-control parallels to diet and exercise: know what to eat, don’t have junk in the pantry, have a trainer or workout buddy to get you in the gym (apply these analogies to investing)
11:20 We added nutrimental information and calorie labels to food but we are actually twice as obese now - behavior change takes much more than just education
12:00 We want to think that we’re rational but information/education is a weak predictor of behavior change (nutrition labels alone don’t change our behavior)
13:25 For the same reasons that we’re fat, we’re poor. It’s complicated information, and it’s just information alone, which is ineffective (see the three legs). There’s a cottage industry of selling complexity.
Our tweet storm - what do people misunderstand about investing?:
14:00 Are people more empowered to manage their money now with technology and more transparency? Are we on a better path to managing our money better now that we’ve gotten away from old school stock brokers dialing for dollars and manipulating our emotions?
15:00 There’s never been a better time to be an individual investor, yet things we think we want like transparency and liquidity can hurt us. E.g. the more you check your account, the more it induces action, panic, and mistakes.
You’ve probably heard of the famous Fidelity study which showed that investors who had forgotten their account passwords performed better than ones who logged in and traded actively.
16:00 Across 19 different countries, the more active people are with trading, the worse their portfolios tend to perform.
17:15 People need financial advisors, but not for the reason they think.
18:00 Emily mentioned this quote from Stephanie Bogan on Patrick Brewer’s podcast, The Model FA: “When people come into your office to talk about their money, they’re never really talking about their money."
19:00 Literally nothing has more excitatory power in the brain than money - not sex, not death, not anything else.
19:40 Daniel has a strong Twitter presence, is great at marketing himself, and at making his ideas accessible: what is his strategy?
20:35 Daniel’s long term plan: put positive messages into the world and study happiness
21:30 Daniel’s podcast recommendations:
Dateline NBC Podcast - listen on Spotify
Ologies Podcast - study of different sciences
The Pitch (“Shark Tank" for your ears”)
Standard Deviations (Daniel’s podcast) - Emily’s favorite episodes:
24:00 Daniel’s book recommendations:
He is writing a book on the meaning of life, so he is reading about this. Best one he read last year: Alchemy by Rory Sutherland (Ogilvy guy) - great book for anyone into marketing. Topic: behavioral economics and applying psychology to marketing.
Connect with Daniel Crosby:
Twitter: @danielcrosby
Interested in business, marketing, and technology? Subscribe free to our minipod, Voice Marketing with Emily Binder. Under 5 minutes twice a week on podcast apps and Alexa:
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055 - Why Don’t Women Negotiate Salary More? How to Speak Up - Amy Hoover
Nearly 70% of women accept the initial salary they’re offered. Why don’t more women ask for more money? In 2018, female full-time, year-round workers made only 82 cents for every dollar earned by men, a gender wage gap of 18%. Negotiating for a higher salary during the offer phase is one key element in closing the wage gap.
According to a recent survey published by Glassdoor, "Women negotiated less than their male counterparts. 68% of women accepted the salary they were offered and did not negotiate, a 16-percentage point difference when compared to men (52%)."
- “Why Don’t Women Negotiate More?” by Carol Sankar, Forbes
Salary, compensation, and self-advocacy: this is important for our personal and collective futures, for our economy, and for job satisfaction. If women continue to earn less, we will never reach parity. But how big a role does salary negotiation play in the outcome that lands us at these tired wage gap statistics?
Amy Hoover
Talent Zoo is the leading site for advertising and marketing professionals
Considered an expert on hiring trends and staffing issues, for a dozen years Amy was an Executive Recruiter and then Managing Partner of Talent Zoo, the nation's premier search firm for the advertising and marketing industries. During that time she placed hundreds of professionals in new positions across North America, from Junior to C-Suite level.
Talent Zoo’s founder and CEO Rick Myers and Amy Hoover built the executive recruiting firm which began in 1998. It evolved into a digital job board and career ecosystem predating LinkedIn. For about two decades, talentzoo.com has been the top site for advertising, marketing, and digital professionals in an industry known for extreme competition. It’s still a fantastic place to hire quality candidates or find a marketing or ad job.
Strongbox West is Atlanta’s largest and longest running coworking space
Ten years ago Amy co-founded Strongbox West, Atlanta's largest independent coworking space and innovation hub, where she continues to manage the Talent Zoo job board and suite of marketing blogs.
Amy is frequently quoted in The Wall Street Journal, The New York Times, Adweek, Advertising Age, and many other notable publications.
Our Conversation
Amy shares hiring insights from the employer perspective which may surprise you, and could help you, your friend, or your colleague at their next negotiation. Whether or not hiring becomes more digital as AI sorts resumes and Alexa processes applications by voice, the art of the negotiation is still about human communication.
Topics:
Amy and her dog Coleman, who is internet famous. #ColemanTheDog. Follow @StrongboxWest on Instagram for more #DogsOfSBW
Why don’t women negotiate more?
Societal expectations for girls (be polite, demure, not greedy), which leads to labeling
Re: NY Times executive editor Jill Abramson:
“Abramson discovered that her pay and her pension benefits as both executive editor and, before that, as managing editor were considerably less than the pay and pension benefits of Bill Keller, the male editor whom she replaced in both jobs.”
Negotiation is not taught in schools or at home enough
Uncomfortable conversations and how candidates can phrase salary-related requests for a win-win
New perspective: women’s intuition that negotiating may be in vain (Knowing When to Ask: The Cost of Leaning In - NBER) - “Women appear to positively select into negotiations and to know when to ask.”
Pro Tip: The hiring manager’s first offer is almost never their best offer
Women’s psychology: “They like me! They really like me!” (Sally Field - Oscar reference)
Millennials and work: the idea of “finding oneself”
Values around culture and flexibility or finding meaning in work - what about the money?
What should women do when they’re at the negotiating table?
Sally Field, 1985 Academy Awards - Best Performance by an Actress in a Motion Picture - Drama - “I can’t deny the fact that you like me, right now, you like me.”
* 16% of women negotiate. This is according to Negotiating Women’s survey by Carol Frohlinger as cited by Monster. “Most women simply do not negotiate at all. Only 16 percent of respondents always negotiate compensation when a job offer is made or during performance evaluations.”
Get in Touch with Amy:
Twitter: @tzamy
053 - Brian Roemmele - The Key to Successful Branding - Voice and Beyond - Pt. 2
Listen to Part 1 - podcast with Brian Roemmele about Alexa hardware and more
Brands have defining points with their customers, as any human relationship does. What makes a brand successful longterm? How does voice play a role?
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Topics and Timestamps:
02:00 How do we build a relationship in which our customer is the hero? (A la Storybrand framework)
02:53 All products, companies, and brands are a relationship with their consumer.
03:20 Every purchase is an emotional purchase because it is defined by neurological reactions - neuropeptides bombard every cell of our body when you make a purchase
04:00 Every brand has an emotional connection to the people who use their products. Some covet it better than others. This means a narrative is being spun overtly or covertly all the time.
Apple has a powerful brand narrative on a cerebral (higher brain) level
05:45 It took millions of years for apes and chimps to speak and listen: we had to create a new O.S., the neocortex on top of the limbic system in order to communicate
07:15 Neuropeptide release of a transaction or purchase - pleasure in the body, your cells will remember this
08:15 Carl Jung - the twelve archetypes
Archetypes, introduced by Swiss psychiatrist Carl Jung, are models of people, behaviors, or personalities. Jung suggested that archetypes are inborn tendencies that influence behavior.
08:30 Voice has the opportunity unlike any other one (including film) to create a rich deep emotional lifelong connection with the customer. If you do this ethically and build the persona correctly for our brand that resonates with your cohort
09:00 The human agenda is connection
09:45 Brian consults with brands and tell them to understand where the transaction and neuropeptide release occurs
09:55 A voice comes from a person - it’s not a thing - it has a persona (a life, a gender, a background) - we are hardcoded to assign these traits to a voice
10:25 We instantly categorize anything we hear or see anthropomorphically because of flee or flight mechanism
11:05 Your brand has a voice: who is it? Fashion brand example from Brian’s work
11:30 It is impossible to make a persona that caters to everyone: there is no voice of everybody
12:05 You need to assign a Jungian or Myers Briggs archetype to your brand
12:30 Your customer is on their own hero’s journey, along with you (Apple and Patagonia and Tiffany and Starbucks do this or have done this well)
14:00 Why is Alexa female? This could be a smart move by Amazon: female voice = authority on a neurological level! - profoundly important. Google has an androgynous voice - a mistake? Brian would argue yes.
14:15 The voice of authority is and always will be a female. The first voice your hear is your mother. Long before eyesight you have the resolution of identifying your mother - this is a survival mechanism evolution has granted. That is why we are wired for communication and voice.
15:40 We can’t change our hardwiring in our brains - female voice is authoritative, especially one in tune with your mother’s voice (can prove this neurologically)
16:10 Anthropologically and culturally, the wise woman (hence the archetype) was always the leader of the tribe until western culture labeled them witches
17:30 The divine feminine and goddess culture came because women were the voice of authority, which we knew instinctually. Women became the voice of the tribe and holder of wisdom. “Don’t eat that, you will die.” Sounds like mom.
18:40 We are a victim and a success story of our reptilian brain
20:15 If a brand keeps us too reptilian we are probably not going to be longterm fans or customers; jealousy or FOMO pulls at the lizard brain but that is short term thinking. Apple is successful because they get cerebral (higher brain, invoking ideas of fashion)
19:15 There is more to this than throwing out an app, you are building a tapestry to weave between the customer for life. We define our life by our brand relationships to some degree, e.g., “That’s when I owned that car, that’s when I got my first iPhone…”
Thomas the Tank Engine helps children make sense of the world
20:20 It’s not the brand we connect to, it’s the story and its role in our own narrative (e.g. Thomas the Tank Engine helped kids understand the confusion of the world with “The little engine that could.”
21:00 90% of what we do on our computers is trying to make sense of the world, e.g. social media as confirmation that what we did was right
21:15 Brand expression is to attract members of a desired tribe (e.g. why I use Apple)
22:20 When we build voice brands (brands around voice, which are coming) - ask: what does your brand sound like? Who is it? Where did they grow up? This is more than a Hollywood storyboard - and this is why you need experts to help with branding.