Four skills for investor success that advisers should know

Investment client behaviour stories from Behavioural Economist, Morgan Housel

Mastering a new subject can be daunting at the outset. When confronted with a large body of knowledge, discerning and acquiring the expertise you need to become proficient may seem tricky.

But in the world of investment, that’s not the case, according to Morgan Housel, an author and investment fund founder who is the keynote at BT Financial Group’s BTNext event for advisers.

He says mastery of a few simple principles can help people to identify worthwhile opportunities and obtain satisfactory outcomes from their investments, without the benefits of specialist training or decades of experience following the markets.

Morgan’s perspective is relevant to advisers, given their professional raison d’etre is assisting others to formulate and execute long-term strategies to build wealth via judicious investments.

A bargain or a bad bargain?

One person’s trash is another’s treasure, as the saying goes. This can be the case in the world of investment, where opportunities to buy into languishing vehicles present regularly.

The trick is being able to tell when trash has the potential to become treasure again and when something is likely to stay out of favour because of underlying, hard-to-fix issues. No one gets it right all the time but being aware of both possibilities and weighing the probability of each should mean you are well placed to make informed decisions.

Nothing stays the same

Everything in life can change and in the twenty-first century, businesses, consumers and technology are all changing at bewildering speeds. Investors who aren’t willing to update their views at the same pace risk losing out to those who are happy to embrace the fact nothing stays the same.

Pain and discomfort are standard

Healthy returns are difficult to achieve without taking some risk is the first rule of investing. What’s just as important to understand is that an element of ‘misery’ often sits alongside investment risk. Misery can take many forms – uncertainty, confusion, short-term loss, regret, anxiety, fear. Becoming an effective investor means learning to cope with it while remaining confident in the eventual rewards to come.

There are alternatives – throwing in the towel or accepting the financial downside that staying safely in your comfort zone will deliver down the track – but their long-term appeal is questionable.

Juggling facts and feelings

Investing is neither science nor art – it’s actually a little bit of both. It marries analysis with psychology and at times the partnership can be an uneasy one, as the objective and the subjective face off.

Knowing when to rely on the rational and stable data that analysis comprises and when to go with your gut is not always easy. Good investors appreciate both have a part to play in the investment process and try to be aware of which skill they’re relying on when coming to decisions.

Behavioural Economist and former Wall Street Journal columnist, Morgan Housel uses history, psychology, and recent business trends to tell stories about how investors, economists, and business leaders go astray, and what they can do to overcome their own biases and pitfalls.

BTNext 2018 offers a unique opportunity to hear Morgan Housel discuss “How Understanding Your Clients’ Behaviour Can Grow Your Business” at events taking place in Sydney, Melbourne, Brisbane, Adelaide and Perth between August 20 and 24, 2018.

Register at



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