Dr. Daniel Crosby on Behaviorally Optimal Portfolios, Risk Composure and the Casino Myth
The episode is relevant to wealth professionals who deal with client behavior during drawdowns and with the gap between investment returns and investor returns. It offers language for discussing risk, expectations and behavioral coaching grounded in the material discussed.
Summary
By the markets & outlook deskIn this Excess Returns episode, Daniel Crosby discusses behavioral investing, including why a fund can produce strong returns while its average investor loses money. He covers safety, stability and success portfolios, the distinction between risk tolerance, risk capacity and risk composure, and how rules and diversification can help investors stay with a plan. The conversation also addresses gambling apps and prediction markets, recency bias, social media feedback loops, and AI’s role in freeing advisors for human relationships.
- Crosby describes a fund that returned over 18% annually for a decade while its average investor lost money.
- He discusses building safety, stability and success portfolios around different financial needs.
- He distinguishes risk tolerance, risk capacity and risk composure.
- The episode covers rules, diversification, benchmark differences, education, environment and encouragement as tools for changing investor behavior.
Chapters
From the publisher’s description| Time | Chapter | Length |
|---|---|---|
| Daniel Crosby and The Behavioral Investor | 5 min | |
| Why winning funds can have losing investors | 7 min | |
| Risk tolerance, capacity, and composure | 6 min | |
| Stability portfolios and rules-based stock selection | 5 min | |
| Investing, gambling, and prediction markets | 4 min | |
| Recency bias and unrealistic return expectations | 4 min | |
| Addictive apps and changing investor behavior | 4 min | |
| Investor distractions and the media diet | 5 min | |
| Investment excitement, humility, and AI | 4 min | |
| What music reveals about consistency and experimentation | 4 min | |
| Where to find Daniel Crosby and the book | 1 min |
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Videos and podcasts are embedded from their publishers. Selections and summaries are editorial and are not investment advice.