Podcast Summary: HerMoney with Jean Chatzky – "Your Money Map Replay: The Investing Mistakes You’re Probably Making, And How To Stop"

Introduction

In the April 18, 2025 episode of HerMoney with Jean Chatzky, host Jean Chatzky welcomes Barry Ritholtz, acclaimed author, columnist, and host of the popular Masters in Business podcast on Bloomberg Radio. They discuss Barry's latest book, How Not to Invest: The Ideas, Numbers and Behaviors that Destroy Wealth and How to Avoid Them, focusing on common investing mistakes and strategies to overcome them. This insightful conversation aims to equip listeners with the knowledge to navigate the complex world of investing, particularly tailored to women's unique financial challenges.

1. Rethinking Traditional Investment Advice

Barry Ritholtz begins by challenging the efficacy of traditional investment books. He questions their ability to make readers better investors, noting, “What have I saved so far and what am I hoping to use this money for? Is their advice really geared to me?” [01:18]. Barry argues that generic advice often fails to account for individual financial goals, tax brackets, and personal circumstances, making personalized financial planning essential.

2. Evolution of the Investing Landscape

The conversation shifts to the changes in the investment world over the past 15 years. Barry highlights the unpredictability and dynamism of modern markets, contrasting past investment strategies with current realities. He recalls a pivotal moment during the post-credit crisis era, where outdated investment rules would have missed significant market opportunities:

“The lesson was all the other reasons and excuses we heard from people. Oh, the market is rigged... All these ideas that kept so many people out of the market in that decade. They were terrible advice.” [04:32]

Barry emphasizes the importance of adapting investment strategies to current market conditions rather than relying on century-old advice.

3. Navigating Market Uncertainty

Addressing the high levels of uncertainty in today's markets, Barry advises maintaining a long-term perspective. He states,

“If you don't need the money for, I don't know, 10 years, 20 years, what happens on any random Wednesday is not relevant.” [06:43]

Barry underscores the resilience required to withstand market volatility and the importance of not letting short-term fluctuations dictate long-term investment decisions. He also critiques the media's portrayal of uncertainty, explaining how it often exacerbates investor fear without presenting actionable insights.

4. The Three Categories of Investing Mistakes

Barry categorizes investment mistakes into three primary areas: bad ideas, bad numbers, and bad behavior. Each category represents a common pitfall investors should avoid to safeguard and grow their wealth effectively.

a. Bad Ideas

Barry criticizes the proliferation of untested investment "rules of thumb" and myths within trading communities. He shares his skepticism towards these ideas, highlighting the lack of empirical support:

“Most of them have either not been tested or tested and it's a coin flip. Sometimes it works, sometimes it doesn't.” [11:15]

He advises investors to adopt a critical mindset, questioning the validity of popular investment strategies and focusing on evidence-based approaches.

b. Bad Numbers

Misleading financial statistics often distort investors' perceptions. Barry uses the example of the misguided claim that “the dollar has lost 96% of its purchasing power over the past century” to illustrate this point:

“You have to understand context and framing. You have to understand double entry accounting to recognize that is bs.” [20:28]

He explains that such statements neglect the complexities of inflation, wage growth, and investment returns, ultimately misleading investors about the true value of money over time.

c. Bad Behavior

Human psychology plays a significant role in investment decisions. Barry delves into behaviors rooted in our evolutionary past, such as herd mentality and fear responses:

“We evolved to adapt and survive on the savannah... most of us animals often don't do that.” [25:41]

He emphasizes the need for humility in investing, advocating for strategies that minimize emotional decision-making and reliance on active management, which often underperforms market indices.

5. Investment Strategies for Retirement

As the discussion turns to retirement, Barry addresses the challenges faced by today’s retirees, particularly the risk of outliving one’s assets. With increasing lifespans, traditional investment strategies may no longer suffice. He advises a balanced approach:

“At least give yourself a chance for the core of your portfolio to not fall behind the market.” [30:33]

Barry recommends maintaining a core investment in broad market indexes to ensure steady growth while allowing flexibility for personalized investment preferences. He also highlights the importance of enjoying the fruits of one’s labor during retirement, rather than hoarding wealth.

Notable Quotes

• Barry Ritholtz on Personalized Advice: “What have I saved so far and what am I hoping to use this money for? Is their advice really geared to me?” [01:18]

• On Market Adaptability: “The lesson was all the other reasons and excuses we heard from people. Oh, the market is rigged... They were terrible advice.” [04:32]

• Navigating Uncertainty: “If you don't need the money for, I don't know, 10 years, 20 years, what happens on any random Wednesday is not relevant.” [06:43]

• Challenging Investment Myths: “Most of them have either not been tested or tested and it's a coin flip. Sometimes it works, sometimes it doesn't.” [11:15]

• On the True Value of Money: “You have to understand context and framing. You have to understand double entry accounting to recognize that is bs.” [20:28]

• Human Behavior in Investing: “We evolved to adapt and survive on the savannah... most of us animals often don't do that.” [25:41]

Conclusion

Jean Chatzky and Barry Ritholtz's conversation offers a comprehensive look into the common investing mistakes that can derail financial success. By focusing on avoiding bad ideas, questioning misleading numbers, and understanding behavioral pitfalls, investors can build more resilient and effective portfolios. Barry's insights, grounded in his extensive experience and recent research, provide valuable guidance for anyone looking to enhance their financial strategies and achieve long-term wealth.

Further Resources

• Barry Ritholtz's Book: How Not to Invest: The Ideas, Numbers and Behaviors that Destroy Wealth and How to Avoid Them – Available at hownottoinvestbook.com

• Barry's Wealth Management Firm: ritholtzwealth.com

• Masters in Business Podcast: Follow Barry Ritholtz on mastersinbusiness@ritholtz.com for more insights and guest interviews.

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