Oct 22, 2020
In this episode of Inside the Plan with the 401(k)
Brothers, Bill Bush and Andy Bush, advisors at Horizon
Financial Group, talk about behavioral finance and statistics over
a 20-year period of investing that JP Morgan has provided. They
also discuss investment biases, the behaviors that impact your
decisions, and how you can understand how to make better financial
- 01:00 – Bill Bush and Andy Bush talk about how your emotions
during difficult financial times like the pandemic can affect your
judgement and JP Morgan stats.
- 02:58 – What are the core emotions that impact
- 04:42 – What does ‘mental accounting’ refer to?
- 06:48 – How does ‘herd behavior’ affect financial
- 08:09 – What is an ‘emotional gap?’
- 10:28 – ‘Anchoring’ is attaching a spending level to a certain
- 11:24 – ‘Self-attribution’ is making choices based on
confidence in personal knowledge.
- 12:42 – What is ‘disposition bias,’ confirmation bias,’ and
- 18:00 – Bill and Andy Buss discuss ‘loss aversion’ and
3 Key Points:
- According to JP Morgan, the S&P from 1999 to 2019 has had
an annual return of 6.1%.
- According to JP Morgan, in the S&P from 1999 to 2019 the
average investor has only averaged 2.5% returns.
- Herd behavior is the tendency that people have to mimic the
financial behavior of offers, or ‘the herd.’
- “You think about investing and a lot of people will think about
the emotions of it, right? There is greed, and there is fear, and
then there is really confidence.” – Andy Bush
- “‘Mental accounting’ in referring to the propensity for people
to allocate money for specific purposes.” – Andy Bush
- “‘Emotional gap’ is really when you are making decisions based
on the emotions, right? There is a gap between how you feel and
rationality.’” – Andy Bush