Standard Deviations with Dr. Daniel Crosby

On this week's episode we review the evidence around whether or not to hire a financial advisor and offer ten questions for separating great advisors from the not so great.

Investing has been described as simple but not easy. By listening to this podcast, you will understand the 12 steps necessary to create lasting wealth. The implementation? That's up to you.

In this episode, we take on the age old questions: "Do birds of a feather flock together?" or "Do opposites attract?" We also make the bold statement that your friends are lame and are keeping you from being as smart and well-rounded as you ought to be.

Is investing a game of luck or skill? In this episode, we examine the three criteria needed to distinguish a game of luck from skill and find that financial markets land somewhere in the middle. We then discuss the implications of this finding for selecting appropriate investment vehicles.

It's human nature to worry about low probability/high salience things and ignore threats that are far more immediate and pervasive. Tune in to learn why and what to do about it.

Feedback loops exist in relationships, nature and especially in financial markets. In today's episode, we examine how capital markets operate in boom and bust cycles due to our subjective perceptions.

Can you trust your gut? Well...sometimes. Today on the podcast we look at the two conditions that must be met in order for intuition to be useful. Even the best-informed intuition is only as good as the milieu in which it finds itself and environmental cues remain the best predictor of whether or not intuition can be trusted. In the absence of a certain level of predictability and rapid feedback,...

Listen in this week to learn: Why positivity brings about more lasting change than negativity How making lists of "not to do" can have a paradoxical effect Why labeling ourselves and others can blind us to the true state of things

It is often assumed that there is a positive, linear relationship between information and market efficiency. It stands to reason, at least to a point, that the more publicly available information we have about a security, the greater our ability to accurately price that security. But is it possible that too much information can be as bad for efficiency as too little? As reported in Scientific Amer...

We’re all familiar with the term “keeping up with the Joneses” but it’s doubtful that we understand just how deeply ingrained this is in our concept of wealth and success. Each year, a Gallup poll asks Americans to determine “What is the smallest amount of money a family of four needs to get along in this community?” Gallup finds that the answers to this question moves up in line with average inco...

Momentum has existed for hundreds of years and has persisted for two decades post discovery. This sort of staying power in capital markets full of hungry arbitrageurs is always the mark of human psychology. Many experts consider momentum to not just be a factor but THE factor. Fama and French don’t mince words, “The premier market anomaly is momentum. Stocks with low returns over the past year ten...

In this episode we look answer: How do financial bubbles form? How likely is a bubble to burst? How can I know a bubble when I see one?

What seldom-uttered phrase can make you wealthier and more likeable? Why did a bank robber use lemonade to commit crimes? Why don't dumb people know how dumb they are?

Your brain is a miracle unrivaled by even the most sophisticated technology, but it is a miracle equipped for a different time and place. After millennia of fighting famine, war and pestilence, we now live in a society of greater and greater ease that is increasingly left to fight psychological battles. Obesity will kill more people this year than hunger. Suicide claims more lives annually than wa...

Let me ask you a question, “Do you like laugh tracks?” Didn’t think so. If laugh tracks are so universally disliked, why do Hollywood executives continue to include them? These executives understand something that we may not; however irksome canned laughter may be, it provides valuable social cues to viewers. Research has repeatedly shown that laugh tracks cause viewers to laugh longer and harder...

How many decisions would you guess that you make in a given day? Take a second, mentally walk through your day and hazard a guess. Most people I ask this question land somewhere around 100, which is way off – try 35,000. That’s right, you make 35,000 decisions per day. Canonical models of decision-making deal with two types of decisions – certain (i.e., with a known set of alternatives with certai...

If bees organize by innate mandate and chimps through tight-knit social interactions, the miracle of human ascendance in the animal kingdom owes to a penchant for behaving in accordance with social narratives. To put it bluntly, we act as if the stories we make up are real. As Harari writes in the magisterial Sapiens, “As far as we know, only Sapiens can talk about entire kinds of entities that th...

We’re all familiar with the term “keeping up with the Joneses” but it’s doubtful that we understand just how deeply ingrained this is in our concept of success and how the neurological processes we’ve touched on here contribute. Each year, a Gallup poll asks Americans to determine “What is the smallest amount of money a family of four needs to get along in this community?” Gallup finds that the an...

How to Avoid Financial Scams Stephen Greenspan is a psychologist and author of the Annals of Gullibility: Why We Get Duped and How to Avoid It. Greenspan’s book outlines notable instances of gullibility including the Trojan Horse, the failure to locate weapons of mass destruction in Iraq and the bad science surrounding cold fusion. Most of the book focuses on anecdotes, but the final chapter sets...

There are three things that intelligent investors must understand if they are to truly inoculate themselves against the fear peddled by the profiteers of peril: corrections and bear markets are a common part of any investment lifetime, they represent a long-term buying opportunity and a systematic process is required to take advantage of them. A “correction” is defined as a 10% drop in stock price...

We rely on the crowd to do everything from run our governments to help us select a place to eat, but does the wisdom of the crowd apply to the stock market? By examining the anatomy of a good decision set forth by Richard Thaler we arrive at the conclusion that crowds are wise in some respects but can lead us astray in others.

It has been said that "this time is different" is the most expensive phrase in investing but what can be said to be the most profitable words in investing? In this episode, we look at the three tests of an investable idea, providing a tri-part test for discovering enduring alpha.

Did you choose to listen to this podcast? The question seems so simple as to be laughable, but new research paints an increasingly complicated picture with respect to the limits of willpower and free will. In this episode, we tackle such questions as: Why do Audi drivers cheat on their spouses? and Would you have hidden Anne Frank in the attic?

Let's face it, life is complicated. That being the case, it tends to defy easy description and silly platitudes. But one phrase proves to be applicable to every market and life circumstance. Listen in to learn the phrase that can humble you in times of prosperity and give you solace in times of struggle.

We are a nation in love with the idea of trusting intuition, but does it actually help us to make effective decisions? In today's episode we examine some of the research in favor of - and against - this notion of trusting your gut. What emerges is a complex picture that shows intuition to have some real, almost metaphysical power, that is domain specific in the usefulness of its application.