Joe Anderson
ABOUT Joseph

As CEO and President, Joe Anderson has created a unique, ambitious business model utilizing advanced service, training, sales, and marketing strategies to grow Pure Financial Advisors into the trustworthy, client-focused company it is today. Pure Financial, a Registered Investment Advisor (RIA), was ranked 15 out of 100 top ETF Power Users by RIA channel (2023), was [...]

Alan Clopine

Alan Clopine is the Executive Chairman of Pure Financial Advisors, LLC (Pure). He has been an executive leader of the Company for over a decade, including CFO, CEO, and Chairman. Alan joined the firm in 2008, about one year after it was established. In his tenure at Pure, the firm has grown from approximately $50 [...]

When you are investing, do you feel like you are on an emotional rollercoaster, careening from feelings of euphoria to depression? Most people admit they know they shouldn’t let their emotions drive their investment decisions, but when we see the highs and lows of the market, it can be difficult not to let our emotions and investing biases override logic. Behavioral finance today on YMYW, as Joe Anderson, CFP®, and Big Al Clopine, CPA, help calm those nerves and explain how keeping a level head can help improve investing returns.

Download the Emotionless Investing Guide

Emotional Investing:

  • Emotional Roller Coaster
  • Emotional Investing
  • Emotional Intervention

Important Points:

  • 0:00 – Intro
  • 1:52 – Take Emotion out of Investing
  • 2:38 – Investing Roller Coaster
  • 4:10 – Average Investor Performance
  • 6:25 – Download the Emotionless Investing Guide
  • 7:17 – True/False: Herding, being influenced by peers to follow trends, is a bias that impacts investors the most.
  • 8:08 – Biases that Affect Investing
  • 9:14 – Herding
  • 9:56 – Confirmation
  • 11:10 – Overconfidence
  • 12:10 – Loss Aversion
  • 13:16 – Bias Roller Coaster
  • 13:59 – Download the Emotionless Investing Guide
  • 14:41 – True/False: Using a “set it and forget it” strategy for investing has a bigger payoff in the long run than trying to time the market.
  • 15:46 – Timing the Market
  • 17:00 – Dollar Cost Averaging
  • 19:00 – Ask the Experts: My husband insists on managing our investment accounts – with poor results. How should I approach him about using an advisor?
  • 21:00 – Ask the Experts: I’m an emotional basket case when it comes to investing. Is getting a robo-advisor a good option?
  • 21:58 – Pure Takeaway
  • 22:55 – Download the Emotionless Investing Guide

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Joe: Do you know what the biggest obstacle is in front of you accomplishing your financial goals? Welcome to the show. The show is called Your Money, Your Wealth®. Joe Anderson here. I’m a CERTIFIED FINANCIAL PLANNER, President of Pure Financial Advisors. And of course, I’m with the big man. There’s Big Al Clopine.

Al: How you doing Joe?

Joe: I’m doing fantastic, Alan. I’m really excited about today’s show. Because when you look at investing or if you look at your overall retirement strategy, one of the biggest obstacles of you accomplishing your goals, is, guess what? It’s you. We get in our way all the time. Because we feel when we invest, we’re on this investment rollercoaster. When we go up, we’re feeling excited, and then we hit down, we think we’re going to crash. So this is American feel, 4our out of 5 feels like their investment strategy is riding an emotional rollercoaster. Well, let’s at least have fun on the rollercoaster. Know what we’re doing. That’s today’s financial focus.

Almost 70% of people regret the investment decisions that they make when they’re emotional, right? Almost 70%. That’s when the gut takes over and starts taking over your brain. Let’s get the biggest brain in the room to help us stop that. Let’s bring in Big Al Clopine.

Al: All right. Today we’re gonna talk about taking the emotion out of investing. And I think we can all probably relate to this on some level, some people a lot, maybe some people a little. But first of all, let’s go over what the emotional rollercoaster is when it comes to investing. Then we’re gonna talk about different biases, why you are emotional investing, and then we’re gonna talk about solutions. What are strategies to kind of make this to where emotions don’t get in the way? Because I’ll- I’ll give you a little teaser, it actually kind of messes up your investment performance. And Joe, emotional, we- not a lot of people talk about it, but it does significantly change your performance when you do the wrong things emotionally.

Joe: Oh, without question. I mean, I think as humans we’re not equipped to manage money, right? Because when you see a train coming down the track, we want to get out of the way, right? So when the markets go down, our natural instincts is to do what? Is to get out of the way, is to sell when we should be doing the exact opposite. Let’s look at this rollercoaster, right? You start your ride, you’re pretty, you know, pretty happy. You’re feeling pretty good. Hey, I have an investment strategy, or I bought an individual stock that you like. Or maybe it’s a mutual fund and then all of a sudden it goes up, Al, look at you, Al. You’re pretty happy there.

Al: Yeah, I’m very happy. And then it gets even better, right?

Joe: Oh yeah.

Al: You get to the top of that, right?

Joe: You hit the peak and it’s like, oh my gosh, I can’t lose. And then all of a sudden it turns and then that anxiety starts building up, building up, building up, and you’re like, oh my gosh, I can’t take this anymore. What do I do? And then you panic. And then what happens? Right? And this is probably when we get out of the overall market and what happens the very next day, whoop, ooop, ooop, ooop, it starts creeping back up, right? But did you sell here? Did you hold on? Maybe you got back in, you said, hey, there’s hope in the market. But then what happens then? Boom, it goes down. Now you’re- you’re, you’re pretty upset. I was gonna say another word- then it keeps going down and you finally give up.

Al: You are just depressed at that point. And Joe, it’d be easy if we knew when the market tops were, when the market bottoms were, but you really don’t know. You don’t know until you- you look backwards. And then you- and it’s funny how we do this. We kind of say, well, it was obvious we should have done this and that. But you know, in the moment it’s not obvious at all. Because sometimes markets fall and they go up. Maybe it’s gradual. Sometimes they do this for a while and you- you really don’t know.

Joe: This is the problem. Because of our emotions, we’re getting in and out of the markets at the wrong time. So over the last 20 years, if you look at the average investor, right, the average investor generates a 2.9% rate of return. If they would’ve just stayed in the overall market, 7.5%. I mean, this is the difference of millions of dollars potentially long term. I mean, that is such a huge disparity.

Al: Well, it is and- and so, and again, we know why this happens, right? It happens because we get excited when the market’s going up. So the market’s working again, right? This is when I want to get in, when it feels good, when it’s working. And basically what you’re doing, you probably missed a lot of the upside. And so you’re buying on the- when it’s high. And then when the market starts to go down, and when it goes down a lot, we get panicked, we sell- normal emotions, but what have we done? We bought high and we’ve sold low, and that’s not a great recipe.

Joe: It’s probably the worst, Alan. It’s one of the worst recipes known. So this is interesting, right? So if I’m self-managed right, 71% have some sort of regrets of their investment decision. Almost all of them, right? But some people have an investment plan. It’s still not great. Right. 59% still have some sort of regret of their overall strategy, but I think it’s a little bit better than kind of winging it. So having a strategy in place, understanding what you’re invested in, making sure that they’re looking at correlation with your overall financial goals, you’re much more apt to probably stay on course than you are to kind of veer off course.

Al: Well, there’s no question. And- and when we think about, you know, some kind of plan or strategy, to the extent that you can try to take emotions out of it, Right. Have a plan that you’re constantly investing. You know, we’ll get into some of the strategies, but here’s, here’s another little teaser. Dollar cost averaging. Your 401(k), you’re buying every month, right? You’re buying low, you’re buying high, but it evens out. You do rather well. You don’t stop investing when the market goes down. In fact, that’s actually the best time to invest. But you have a strategy for getting in and staying in, and you tend doing a lot better.

Joe: Hey, go to our website, YourMoneyYourWealth.com. Click on our Emotionless Investment Guide. We want you to have emotion, but not necessarily when you are investing. Go to our website, YourMoneyYourWealth.com. That’s our gift to you this week, folks. Click on this special offer. You can download it right there on your computer, your mobile phone, whatever that you want. It’s our Emotionless Investment Guide. We gotta take a break. We’ll be right back.

Joe: Hey, welcome back to the program. The show is called Your Money, Your Wealth®. Joe Anderson and Big Al. We’re talking about how do you invest and get the emotions out of the way. It’s pretty difficult to do.


Go to YourMoneyYourWealth.com. Click on that special offer this week. Get the emotion out of investing. Get a strategy in place. Click on the special offer, download it right there on your computer. Let’s see how you did folks on that true/false question.

Al: Herding. Being influenced by peers to follow trends is a bias that impacts investors the most.

Well, that is true, but, let’s explain what that means. So what that means is there’s certain biases that we all have that- that sometimes cause us to make the wrong decisions investment-wise. And herding is when you’re following the herd and doing what the rest of the people are doing. This actually is the bias that in terms of- of studies and quantification is- is probably the biggest bias in terms of making bad decisions.

Joe: Well, yeah, let’s take a look at some of these biases. So 34%, right? So that’s the top one is herding. So you always like to follow your peers, you know, people that you respect if they have a hot stock tip and things like that. Yeah, you can relate to that. You know, confirmation, 20% kind of fall into that range. And we’ll kind of get into more of the details of what confirmation is, is that basically you’re only going to listen to the news that you wanna listen to. Or you’re only gonna listen to the people that maybe have the same opinions that you do. Overconfidence. This is a big one, right? I think we’re all overconfidence in some shape or form. You know, they do surveys on people driving. Right. We live in Southern California, right? And so traffic is terrible. But if you do a survey and they would say, all right, well, how many of you think that you’re an outstanding driver? How many people would say, no, I’m not. Most people are gonna say, yes, I’m an outstanding driver. But we all know that most people are terrible, terrible drivers, right? And then this loss aversion. We’re twice as fearful to lose money than we are to gain. And so with this, this kind of makes some adverse investment decisions here too.

Al: Yeah, Joe, and you put these all together and, and it- it’s kind of again, another recipe for a disaster, using that word.

Joe: Herding. So let’s go dive in a little bit deeper, give you some real life examples here. The dot com bust is probably, you know, one of the biggest- is that every one, every company was gonna put dot com at the end of their company name, and the valuations were through the roof.

And then we saw the dot com bust. And you really don’t understand maybe what you’re invested in, you’re just trusting the people that you’re following, that they’re making the right decision. Versus maybe doing your due diligence and figuring out exactly, is this the right investment for you?

Al: Yeah, and we’ve seen these in recent days. Remember the dot com bust. Now that’s already over 20 years ago, but for many of us, that was pretty significant. And then the real estate bust. What’s the next bust? Who knows? But this is what happens.

Joe: Confirmation biased. I think we all have this as well. You- you purchased a stock, or you purchase any type of investment. Really what you’re trying to do is find news or information or talk to people that is going to confirm that decision was the right decision, right? Because as soon as you start hearing things that maybe that wasn’t the best decision, you’re gonna tune that out, right? You wanna have that- that confirmation bias is that you’re only gonna get one side of the story. We only wanna listen to that one side of the story that we truly believe in, that this is the right investment, right? Which could be wrong cuz no one wants to make bad decisions, right? Once you realize you make that bad decision, then it’s hard to kind of shift out of it, right? Then it’s like, oh man, what did I do with my money? And then you feel all sorts of different types of regret and things like that. So confirmation bias is really dangerous. Because if you buy a product that is a really bad product, but you got sold it, but you don’t wanna listen to any other, you know, outcomes, but what you believe is going to happen.

Al: Yeah, Joe, it actually happened to me in real estate in the 2000s. I was- I was very much into adding to my real estate investments. And different articles, most of ’em, very positive. I read ’em. This is great. And then I’d see a negative article. UCLA actually came up with some negative articles and I remember looking at those and just, no, that doesn’t apply to me. And that- that’s the problem. Right.

Joe: Overconfidence, this is one too. You know, let’s say if you make an investment decision and it goes well, that’s all on you. You’re the smart one, right? Oh, I knew this all along. And as soon as it goes bad, it’s someone else’s fault. Right? So there’s the kind of a blame game here too with people with their overconfidence. It’s like, oh, with the 2008 bust, it’s like, oh yeah, I got out of the overall market. You know, I timed it perfectly, you know, oh, I, I saw this coming, or I saw that coming. And then you actually look at their investment statements and, you know, they’re kind of full of, you-know-what.

Al: Well, you know what happens. They- they will tell you they got outta the market and they probably did. Right. But they don’t tell you that they forgot to get back in the market. And they missed a big recovery, big return because the best returns, the best investment is right after a downturn.

Joe: All right. Loss aversion. So we’re twice as fearful to lose a dollar, and then we are to gain a dollar, right? So, you know, the- the pain of loss is twice as hurtful as the joy of winning. And this is real life, right? Because then when that’s where this whole problem kind of begins. As we see the market go down and you look at your account statement and you see these investments keep trickling down, down, down, down. And it’s like, oh my gosh, I can’t handle this anymore. Right? I have to do something. And then this is when we pull the plug, right? We have to get out. We have to get that relief, and let’s just get out of the markets, right? Let’s get out of this investment. Let’s sit on the sidelines and let the market continue to crash, and then when it recovers, then that’s just what I’m gonna go in. That’s almost impossible to do, but the emotion and the bias is so real that that’s what happens to most everyone.

Al: Yeah. And, and it happens as, you know, think of the market as a whole. Markets tend to decline more quickly than they grow. And it’s because of that concept is when, when there’s a little bit of downturn, a lot of us get very fearful. We sell, and it- it just exasperates the problem in the market.

Joe: So if we kind of put these together, hey, I’m gonna follow the herd. I listened to my Uber driver tell me this great stock pick, and then I bought the stock and then all of a sudden it goes way up. And then I’m overconfident. It wasn’t really the Uber driver that gave me the stock pick. I figured it out, right? I knew that that particular company was gonna go very well, and all of a sudden it tanks. Then I get this loss aversion. So I go, my gosh, I’m so fearful, but do I wanna sell it? Because I’m still overconfident, but what do I do? And then maybe I sell it and it goes up, and then I only listen to the things that I wanna listen to. So all of these biases together doesn’t necessarily add up to a really good return. If you wanna get these emotions out of your investment strategy, I think that’s a good idea. We can help you. Go to YourMoneyYourWealth.com and click on our guide. It’s an Emotionless Investment Guide. Go to YourMoneyYourWealth.com. Click on that special offer. It’s our free gift to you today. Hey, we’re gonna get a little intervention when we come back from the break. What are some things that we could do to take the emotion out? Stick around. We’ll be right back.

Joe: All right. Welcome back to the show. Joe Anderson, Big Al. We’re gonna get a little intervention on ya.

Get that emotion out of your investment decisions. If you need a little bit more help, go to our website, YourMoneyYourWealth.com and click on that special offer. It’s our Emotionless Investment Guide. You just have to check it out because I’m telling you, it will cure you from all of these bad biases. Let’s see how y’all did on that true/false question.

Al: Using a ‘set it and forget it’ strategy for investing has a bigger payoff in the long run than trying to time the market.

Gosh, true or false? It’s actually true. And- and ‘set it and forget it’ is not necessarily the best strategy, but when you compare it to people that try to time the market in and out because of emotions, you end up generally with a lesser performance- investment performance.

Joe: So S&P500, let’s see, this is a 20 year time period, 2001 to 2020, S&P500 roughly did about 7.5%. Okay. If you exclude the top 10 days, so this is- all right- when, when, when markets go down, you see like the next day jump pretty high, the market’s down 1%. The next day might be up 1.5%. All right? You see these huge pops in the overall market. Those usually happen after a down day. And what happens with a big down day, a lot of people get out. So for those people that got out, and you missed the 10 days, only 10 days in the market in the 20 year period- Okay? Think about that- it’s a lot of days in 20 years, you missed the 10 best. Your return went to 7.5% to 3.4%. You exclude the top 20, you’re flat. You didn’t make any money even though you were fully invested roughly for almost 20 years. But you take out the top 20 days. Right, you’re flat. Exclude the top 30 days, down 1.5%. 40 days, you’re down 3.5%. When the-when the market over that period did 7.5%. That’s why timing can be somewhat challenging, right? Because when markets go down, they might quickly recover, or you might have a period of time where it continues to trickle down. It’s really, really difficult to kind of figure out what’s gonna happen tomorrow.

Al: Yeah, no question. So let’s talk about dollar cost averaging. So this is where you’re investing a periodic amount each month. 401(k) would be a perfect example, right? You- you have a certain amount of money coming outta your salary. You’re investing in the market. Here’s the key here, is to keep investing in all markets. I know it feels more fun when the market’s going up and the next few days you look at your portfolio and it’s gone up. That’s really fun. But, what’s happening is as the market goes up, you’re actually spending, the stocks are more expensive, you’re getting less shares. Here’s an example of like $100 a share. You’re investing $1000 a month. You start get- with 10 shares as the market goes up, you’re getting less shares. As the market goes down, you’re buying more shares. This evens out over the long term. But I can’t tell you how many people we talked to that will tell us when the market’s going down, they stop investing in the 401(k) because the market just isn’t working. That’s the best time because you’re getting more for your money.

Joe: We got this rollercoaster of emotions. But putting that rollercoaster into more of a Ferris wheel is that you have to start with your goals, right? What are you trying to accomplish with the money that you have? Okay? You have to look at how much risk really? You know what- what is your, you know, sleep at night monitor say? Cuz there’s risk tolerance, but then there’s also an expected rate to return that you probably need to generate to accomplish your goals. So working and combined with your goals, your tax situation, your time horizon, putting that together to come up with a tailored portfolio specifically for you is the key. Because then if you understand what you’re invested in, you understand what the risk is associated with the overall portfolio, right? You understand your fees and your tax situation, you’re probably gonna stay on track. Versus kind of feeling like you’re on this rollercoaster ready to get either kicked off or you want to jump off.

Al: Joe. I think that’s the key. I mean, I think a lot of people invest when they think about investing. It’s like, how much can I get? What’s the best rate of return I can get? And the better way to think about this is what rate of return do I need? What’s my time horizon? How- how much risk am I willing to take? These types of things. You’ll end up with the right portfolio and stick with it. You generally do a lot better over the long term.

Joe: Hey, let’s switch gears. Let’s go to Ask the Experts.

Al: “My husband insists on managing our investment accounts with poor results. How should I approach him about using an advisor?” This is from Kate.

Well, Kate, that’s a great question. I mean, just some general things I guess I would say being married 35 years, is it’s best to have open communication on these types of things. If you’ve been married a while and you haven’t had it, you know, maybe just some- some ways to talk about how, how’s the investing going? I’m- I’m curious. I just wanna make sure we’re on track, you know, things that sort-. But here’s some- something that I might- might think about too, which is, when you think about investing, it’s important to think what your goals are as opposed to what the investment results or percentage should be. So if you can start talking with your husband about goals, what rate of return do we need? When do we wanna retire? You know, you kind of work backwards to figure that out and then you take a look at if the investments are appropriate for you and maybe that’s the way to go. But Joe, that- that’s a tough one to have those conversations.

Joe: What are you, Dr. Al?

Al: Trying to be.

Joe: So the husband is just completely blowing up the overall portfolio. He doesn’t know what he is doing, and she’s like pulling her hair out of saying, you know what? You gotta stop doing this, or else we’re gonna go broke. Right? I think the number one cause of divorce, is money issues.  Right. I don’t know if I just kind of made that up. I’ve- I’ve heard that. I don’t know if it’s number one, but it’s up there, right. So, yeah. I think you have to have open dialogue. I know it’s gonna be a tough conversation, but it’d be like, I don’t know if you have to hire an advisor, but I think it’s like, hey, let’s take a look at this. What is our overall financial plan? What is your strategy in regards to the money? It looks like, you know, we’re- we’re losing more money than we are making. I don’t know. You know- but yeah, that’s a sensitive topic. But you’re just- it’s just boiling up inside of you, so you have to get it out as well and get that open, you know, conversation I think is the best. Let’s go to the next question.

Al: This is from Jimmy. “I’m an emotional basket case when it comes to investing. Is getting a robo-advisor a good option?”

Good question, Jimmy. So, a robo-advisor is an advisor of sorts, but it’s- it’s generally a program, it’s a computer trading type of thing. And there’s- there’s actually many good ones and it can be a great option for you. You don’t have a generally- you don’t have an advisor to talk about things like, when can I retire? How much do I need to save? How do I save for college? Well, I wanna save for a home, whatever it may be. Those types of financial decisions you wouldn’t necessarily get, but it can be a way to go. And then you can sort of try to ease your mind because you’ve got at least an approach for- a disciplined approach of investing where you can sort of not worry so much about it.

Joe: Yeah, that’s well said. I mean, if you’re just looking for a simple investment solution that gets your emotions out of the way. You know, then I think that’s a good option. But you’re right, you’ve gotta figure out what the money’s for. What is the strategy? What is the plan? What’s the tax implications of everything that you’re currently doing? Right? And then when it comes time to withdraw the money, do you have a strategy there? So, you know, working with an advisor can help you with that. And then if you want to go to a robo from there, it could be very cheap to do that. Or you could, you know, there, there’s a variety of, of different choices.

But what did we learn trying to take that emotion out of investing? So we looked at the roller coaster, right? We get really excited and then we get scared and we get that anxiety, and then we get mad, and then we give up, and then we get depressed. I mean, all sorts of emotions, you know, those biases really influence those investment decisions. But if you get educated and you understand that, oh, this bias is creeping up on me, maybe that could take a step back to make sure that you’re making the right decisions and then coming up with an overall strategy, right? Get your plan together, get the disciplined investment approach. And then I think you’ll be much better off.

All right, that’s it for us. Go to our website, YourMoneyYourWealth.com. Click on that special offer this week, that Emotionless Investment Guide. For Big Al, I’m Joe Anderson and we will see you next time, folks.


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