The Voices in Your Head

Welcome to another edition of Mr. Stillman's openness the podcasts that helps you learn more about financial happenings in your financial life. Perhaps we love to take different subjects and ideas and apply them to everyday situations. Walter Salter with you this week alongside John Stillman or John your beard is coming back. It started overseas jobs at all only creep back in go through many phases in this facial hair thing. Well, we just we need to get your beard trimmer that works so you don't have to go from strength full-blown terrorist load to Babyface and growled if you could just keep it trim that a nice reasonable level.

My wife Connie says I look like I'm 12 when I don't have the beard, how old would you say I look like when I do have the full-blown beard 9797 that's art that's our range. No gray for a 97-year-old beard. I mean, that's impressive clearly is a 97-year-old who dies his beard using the just for men, not the what is the one where you leave just a little bit of gray touch of gray.

Anyway, enough about beards. Yes, it's I've got the couple day stubble going on now, which I think is a good length but if you're still listening to the podcast after your talk. Here's what we've got coming up for you today were really talking about the voices in your head and not just John and I as the voices in your head today. I think everyone kind of when you every would mention like voices in people's heads. It's easy to picture the old cartoons where you have that the good and evil Lori I guess it's the devil in the end that in the angel on your shoulder right the good and the bad talking to you trying to convince you of what to do. Anytime you're faced with a moral dilemma right exactly so in the investing world. It's not just John and I on your shoulder be very comical to voices to have in your head would necessarily be a good and evil kind of thing in the investing world most popularly it's the voice of wisdom versus the voice of greed we find more in some cases, the voice of fear.

Okay, that fear and greed. Maybe, go hand-in-hand, so we kind of would imagine, or at least hope that you can recognize when the voice of wisdom is telling you something. Hopefully that's pretty obvious. Sometimes it can be a little harder to discern the voice of greed because sometimes things the voice of greed says actually sound like good ideas on the face. So what would I do is give you some statements you might hear the voice of greed say so that you can be aware of it and then John you give us. Maybe some ideas of how we can talk back to that voice or handle that information. We isolate one statement we could hear the voice of greed say is the market is doing great right now. This is a good time to invest a little more aggressively so you can take advantage of the growth. Well, I believe it was Warren Buffett believe.

I know it was Warren Buffett who said be fearful when others are greedy and greedy when others are fearful that is to say contrarian investing has its benefits. So everybody else thinks it's a great time to really know for gas on the fire from an investment standpoint, that's when you dial back and vice versa. When everybody else is scared you go out anybody. This is why bookies drive boomers right because of the average person could pick a football game well then you know the bookies wouldn't be making as much money as they are so there is something to be said for contrarian bedding in the gambling world. If the NFL winds come out for the game and you see that the patriots are seven point favorites over the Dolphins, then the next day the patriots are only six point favorites over the Dolphins. What does that mean that means that too many people were betting on the Dolphins thinking that the Dolphins would lose by less than seven so many people put money on the Dolphins. The bookies say oh we have imbalanced bedding here if the Dolphins cover the spread where in trouble so they have to change the line to try to entice more people to put money on the patriots right so that's how the spread gets set by Vegas and football or any sort of sports gambling, so if the line comes out and you see that the patriots are seven point favorites. Then you see that there only five point favorites couple days later what that means. A lot of people are putting money on the Dolphins, which means you should put money in the patriots because the idea is the average person can't make the right call so same thing with your investing. When people are thinking. It's a great time to put money in the market. Often, the opposite is true. And when everybody is saying sell sell sell. Things are bad. That's often your opportunity go swoop in and buy stuff on sale. The difference between the two is that no matter what age you are, your bet on the patriots or the Dolphins would be an equal decision whether your 20 or 55. However, in the investing world.

Whether to continue to put money in whether to buy or sell is going to be largely dependent on whether it's a good idea or not based on if you are 20 or 55. There is a difference right and it could be that maybe you should be betting on football at all. You should be betting on baseball could be you're not even in the right arena or field. In this example, I don't baseball. I have a closest to them, like Pete Rose. They won't let you Hall of Fame so don't bet on baseball. Don't think that it don't take the advice of sports betting at all for doing any Leica compliance issues art that's good. That's the voice of greed may be saying one little thing to get there.

Here's another statement John that guy on CNBC seems to know what he's talking about. You should follow his advice quickly before everybody else figures out too well, if it's already made CNBC. It's a little too late for you to be ahead of the curve. But I'm blown away by the number of people who think that because Jim Cramer said something and fell go out and follow his advice.

They're going get in ahead of the crowd that they have. Some have insider information that they can take advantage of you.

The fact of the matter is before Jim Cramer even knew it. It was already too late 70s. He already had that information. Yeah, I mean it. The idea is that any information like that is all already priced in to whatever stock you toxic and a look at it. So there are different theories on just how far ahead of the curve, the market actually is.

In terms of the pricing of stock like there is the idea that anything you could possibly hear good news or bad news is already priced into the stock of your something that's good news.

Stock prices already gone up your already too late. There's even a theory.

I it's called efficient markets will you have a strong or weak view of efficient markets, but there's actually a theory that says even insider trading doesn't matter because even that stuff is already priced in to the stock price so it's foolish to think that because he heard something on TV that you're going to get some had a good deal because you have the curve. The other thing to understand is that a lot of stuff isn't it's not investment advice.

Okay, it's entertainment right and when you think that you getting investment advice from people on to you. That's when you get in trouble because it it truly is meant to entertain and engage you not to tell you what to invest. Or maybe a chance to learn some broader topics. Maybe there's a little bit of education's going on, but it's not. Don't take it as specific right guidance for individual stock that's Wilson. You know what, if you hear