The Indicator from Planet Money - How Investment Advisors Invest Their Money

Financial advisors counsel people on what stocks and bonds and other investments to buy, and how to balance portfolios. But where do they put their own money?

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Hey Josh. How are you? Good, how are you doing is the CEO of riddles wealth management. He invest people's money for them. He's been doing it for a couple of decades. We've had them on the show a bunch of times. I've always wanted to ask him something. How do you invest your money and money managers always say things like, you know don't panic in a recession. Don't move your money around too much don't sell everything when the market drops buy-and-hold, but what do they do? In fact, that is the topic of Josh Brown's new book how I invest my money. This is the indicator from Planet Money. I'm Stacey Vanek Smith Daily Show how many managers invest their own money and how Josh invest his

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Josh Brown CEO result wealth management and author of the new book how I invest my money welcome to the show. So if you talk to your fellow money managers about how they invest their own money, but they do with it. Is this kind of like asking chefs like what they cook for themselves when they're at home. I think that's a really good analogy. I hadn't thought of that but I like it. Steal away. So tell me about I don't know. What were there any surprises there? Were there were a few constants. We heard a lot about index funds being a building block for portfolios that you're basically like placing a bet on the stock market going up on the index at South going up and this is like 101 investors thing like this is like what Pros, you know, all this stuff would do their like basic.

Is what you got and For Better or For Worse, you don't have somebody who's trying to beat the stock market and and failing and then we heard a lot of people would made Investments that they know mathematically or logically weren't necessary. And one of my favorite chapters is my friend. Bob seawright who got a couple of decades on me, but his his concept was sometimes the financial investment that looks the most illogical makes the most sense of all when you incorporate the emotional aspects nice talking about a beach cottage that he bought that is now we're all of the memories of his family are made and it's where he spends time with his grandkids and financially it's not a good investment will probably not break even on it, but that's not the point. What was the craziest thing? You heard I was surprised.

That he owns zero bonds. I guess if we're going to keep our Chef analogy, that's like pasta that is everybody's got pasta on the menu. I almost think it's it's even more Elemental than that. I almost think it's the water that you boil and and went vegetables at like when we say bonds what we're referring to his treasury bonds, which are colloquially speaking the risk-free asset as far as the eye can see and he's willing to Bear risk and everything. He's ever accomplished in his life has come as a result of bearing risk-bearing more risk than others were bare. And so that's that that's an example of an investment philosophy that overlaps for the life philosophy of how these investors deal with their money at A Moment Like This like in a moment of

Cuz I imagine that is the question you're getting all the time. If you're going to be a financial advisor to investors and you going to be worth anything to it to those investors, you have to have it investment philosophy that's long-term in nature and that is built to endure Market events economic crises, etcetera. You have to get people to believe in what they're invested in if you expect them to hold on to that portfolio through Market volatility if their relationship with their Investments is casual and not spiritually and emotionally meaningful and it's easy for them to discard those Investments the minute the slide in their stuff. And so I think one of the biggest Trends in the market 2020 is ESG were environmental social and governance focused investing. So these are portfolios being put together.

Based on the premise that investors want to have their money go to companies that are doing the right thing when we are they treating shareholders fairly when we say social are they promoting women? Are they hiring people that are non-white 40 year old males ESG is the only category of mutual fund. That's so a positive intros this year. And the good news is that the millennial generation they care about what they own they want to have a connection with their portfolio. So I would say that that that's like one of the the Silver Linings of this moment in time is that Wall Street is waking up to the fact that this is a new generation of investor this generation not only didn't Panic from volatility, but the volatility actually drew them closer in

You had to know this question was coming.

How do you invest your money? Well, I'm in 100% crypto. So real.

Sam Sam show in my 401k

As your retirement I invest directly in the same strategies that our clients to clients. So outside of my retirement accounts. I'm making Venture Investments. I'm back in friends were starting companies.

So like for me that's what makes me feel good to be able to support things that I myself believe in or people were important that I believe in investment. You've made them like what's The One That Got Away the most amazing investment. I ever made was in my own property in 2013. My partner and I put up $50,000. We build a firm that I think could be doing ten million dollars in Revenue next year at your own entrepreneurial venture. Is there one that got away? Well when I was a teenager, I owned all of the stocks.

Goodnight, I don't 1920 you were like a best man. I was like, I don't even know what I was doing but earrings at the mall with me at 7 to because I didn't hold any of them. I had a bunch of stuff that no longer exist, but I also owned Amazon, but I didn't hold it like so like right so long since we bought it, so don't worry. I'll be fine. But like I'm saying, you know, you said yourself. How could you really regret that decision? How could you have possibly known of the 30 publicly companies from 1997-1998 that one of them was going to become as big as important as Amazon and you wouldn't pick them is on by the way. It was a company that sold books The Soul books. Yeah, totally.

Texas two companies that go bankrupt and disappear the smaller they get the more they shrink shrink in importance in the index because they get so small. Where is the winners that keep on winning balloon in size within the index one of the best regret minimization Shrek's I know of is 2 ft the index do its work and had you done that over the last 30 years rather than trying to outsmart the market. You probably did better than 99% of other investors for having me and I hope everyone enjoys the book this episode of the indicator was produced by Jamila Huxtable and fact-checked by Shawn. Saldania. Our editor is Patty Hearst and the indicator is a production of NPR.
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