A Fund Made 18.5% a Year. Its Investors Lost Money | Daniel Crosby on Why Good Returns Aren't Enough

Daniel Crosby, a psychologist and chief behavioral officer at Orion, joins Matt Zeigler to discuss the paperback edition of The Behavioral Investor. He walks through the story of a fund that returned over 18% a year for a decade while its average investor lost money, and explains safety, stability and success portfolios built around different financial needs. The conversation also covers risk tolerance versus risk capacity and risk composure, gambling apps and prediction markets, social media feedback loops, recency bias, and where AI fits into financial advice.

1. A fund returned over 18% annually for a decade while its average investor lost money, illustrating the gap between fund returns and investor returns.
2. Crosby separates risk tolerance, risk capacity and risk composure as distinct concepts.
3. He proposes safety, stability and success portfolios aligned with different financial needs.
4. He argues algorithms reinforce market biases, that excitement can signal a blind spot, and that AI can free advisors to spend more time on human relationships.