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Apr 20, 2017

NGPF Podcast: Tim Talks To Prof. Meir Statman About Behavioral Finance

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I enjoyed my recent conversation with Finance professor Meir Statman of Santa Clara University, which is just down the street from the NGPF offices. Meir conducted some of the earliest research in what we now know as behavioral finance. He discusses his book, Finance for Normal People, and shares his insights about how investing should be taught in school (spoiler alert: Keep It Simple!). He also describes his approach to playing the stock market game and why fees matter so much when comparing investment options. You will know more about investing after you listen to Prof. Statman. Enjoy!
Details:
  • 0:00~1:26 – Introduction
  • 1:26~5:44 – Professor Statman’s background
  • 5:44~7:52 – Own investing experience and effects on research
  • 7:52~9:30 – State of behavioral finance in the 1980s
  • 9:30~10:33 – Position as financial analyst
  • 10:33~12:53 – Early research interests
  • 12:53~18:27 – First research on solving the dividend puzzle
  • 18:27~21:02 – Why write his new book, Finance for Normal People?
  • 21:02~23:39 – Cognitive errors normal people make
  • 23:39~26:24 – Overconfidence and investing
  • 26:24~26:43 – A word from our sponsor, Next Gen Personal Finance
  • 26:43~29:27 – What role does emotion play in investing
  • 29:27~36:24 – Young investors and risk
  • 36:24~38:02 – Stock market game
  • 38:02~41:33 – Active versus passive funds
  • 41:33~43:22 – Core concepts of investing that every high school student should know
  • 43:22~46:15 – Problems with investment fees
  • 46:15~48:48 – Making index funds interesting
  • 48:48~53:12 – Importance of financial literacy
  • 53:12~54:52 – Favorite lesson to teach
  • 54:52~55:52 – Conclusion
Resource:
Quote:
  • “You can be cool and I feel really really cool only investing in index funds and I wear it with pride because what it says is that I am too smart to be fooled by those promises of high returns from beating the market”
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About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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