Can a 15 minute talk about investing really be interesting and useful? You better believe it! Here are 6 eye opening TED Talks on investing that everyone should watch.
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I’ve got a confession. I’m kind of obsessed with TED Talks.
It probably started around ten years ago when I was in college at Oregon State and they hosted a TEDx event.
It wasn’t anything remotely spectacular. No big name speakers. The topic wasn’t even that interesting. I vaguely remember it being about renewables and agriculture.
The thing is, even with a topic I wasn’t interested in, I still walked away impressed.
Never had I been to an event where so many people spoke for such a short period and conveyed so much great information.
That’s the beauty of TED Talks. There isn’t one person up there rambling on for 45 minutes.
They’re quick 10-20 minute bursts. Most chock full of interesting tidbits.
It’s like reading a best-selling book in 15 minutes.
Ever since then I’ll catch myself browsing the TED website. Watching a video here or there whenever I get the chance. I can’t even imagine how many hours of talks I’ve watched at this point.
While watching Ray Dalio’s talk a few weeks ago, I got the idea to pull together the best TED Talks on investing. These are the results.
Shlomo Benartzi: Saving for tomorrow, tomorrow
To become better investors, you need to become a better saver.
Investing means putting off pleasure now for the reward of more money later.
The problem is we’re terrible at this.
We hate thinking about a year from now. Or ten years from now. Or even 30 years from now.
People enjoy dreaming about the future but don’t like taking steps towards getting there.
Shlomo touches on how the “us” of today thinks very differently from the “us” of tomorrow.
Some of us have insurance for our cell phones but don’t have life insurance for our kids.
Making a risky investment today when the markets are good is easy. It might not feel so great in a few days or months when the markets drop.
The average American spends hundreds on lottery tickets a year but only 11% save enough for retirement.
To be better savers, and investors, we have to do a better job of getting in touch with our “tomorrow selves.”
Daniel Goldstein: The battle between your present and future self
Like Shlomo, Daniel Goldstein brings this battle between present self and future self into focus.
People are constantly trying to achieve a balance between doing what we need to be happy now and in the future.
The problem is you have to face present you in the mirror every day. Who knows what the future you will look like.
Present self-doesn’t think you’ll have any problems investing tomorrow…tomorrow.
It also doesn’t think you’ll have any problems during the next market correction or recession.
You can throw all your money into stocks or cryptocurrencies and be able to ride out the pullback.
The problem is “future you” will feel be feeling a lot different when 40% of your money is gone.
Daniel Goldstein helps us take into account our future selves and make decisions that are best for the both of us.
Keith Chen: Could your language affect your ability to save money?
Why do people have such a hard time preparing for the future, today? Well, Keith Chen would say this is a uniquely American problem.
Keith wanted to know why the savings rate in America is so much lower than other countries around the world.
Growing up in a Chinese speaking family, he started to notice a difference in the lack of a past and future tense.
In English, people say “it rained yesterday,” “it is raining,” “it will rain tomorrow.” We have to change our statements to account for time.
It’s not the same for many languages around the world.
For a lot of languages, it’s perfectly acceptable to say “yesterday it rain,” “now it rain,” “tomorrow it rain.”
Through various tests, what Keith was able to determine was that this change in language has huge impacts on how we think about our future selves.
Because you have a “future tense,” when talking about the future, you remove it from the now and talk in the abstract.
When talking about the future in other languages, it doesn’t seem so abstract. You’re using the same words for the future as you would for the present.
Now that you know you’re terrible at accounting for your future self, you can start thinking about it more.This can help you become a better investor.
Try bringing future you into the present. Think through the possible investing scenarios and the feelings that go along with those them.
Account for future turmoil by creating a portfolio that will smooth out the future ups and downs.
Laurie Santos: A monkey economy as irrational as ours
Those last three TED Talks had a lot to do with future you vs. present you.
Now you understand why those two are not the best of friends. You both want different things which lead to some awkward fights.
Laurie doesn’t look at the difference between the two. She wants to understand why the present you can make bad investment decisions regardless of what future you wants or thinks.
Are we the stupid ones or do we operate in a flawed system?
To get at the heart of this, she taught monkeys to use money.
You’ll have to watch the video to understand, but the process her and her team went through was pure genius.
They were able to teach monkeys to use currency. Then they created scenarios where monkeys would have to use the money in ways like people.
Turns out they do the same stupid stuff with money that we do.
We’re both terrible at thinking in absolute terms. Everything is relative.
Instead of looking at exact amounts of how much we gained or lost, we just look at the fact we lost something.
Turns out we both have serious loss aversion. It doesn’t matter how much we gain, we just don’t want to lose money.
This causes you to make riskier choices that aren’t always in your best interest.
Our bad decisions aren’t because the world is rigged against us. Our brains are wired to work against us.
It’s important to understand how your brain tricks you and then stay out of those traps when investing.
Kevin Slavin: How algorithms shape our world
One way to stay out of those mental traps from other videos is with algorithms.
Kevin studies algorithms and how they’re application is changing the markets and shaping the world.
Currently, there are over 2,000 physicists on Wall Street writing algorithms to gain an investing edge.
A lot of these are in the high-frequency trading world. These people don’t deal in hours, days, or years. They invest in microseconds.
You’re never going to make money day trading. With the army of physicists and supercomputers at their disposal, you’ll inevitably lose.
The only weapon you have is the gift of time. You’ve got to have a longer time frame than them. Invest 5, 10, 20 years in mind.
You can also use their weapons to help make better decisions.
Algorithms remove the brain’s tendency to make stupid mistakes. It takes emotions out of the equation and works on pure logic.
You can add a little emotion or intuition back in if you want, but narrowing down your list of potential investments using an algo will win in the long run.
Ray Dalio: How to build a company where the best ideas win
While Ray’s talk may be on building great teams and radical transparency, it doesn’t mean we can’t apply lessons from his talk to investing.
I mean, he’s one of the best in the world at it!
Like Kevin, Ray loves algorithms. He likes applying them to people and then building great teams.
Instead of relying on people to learn from their mistakes, he writes them down, embeds them in an algo, and tries to make sure it doesn’t happen again.
But how do you reduce those mistakes in the first place? How do you keep from having to make so many mistakes upfront to improve the algorithm? You might think your initial idea is right…until it’s not.
That’s why it needs a stress test.
Find things that are counter to your idea and see if they still hold up to scrutiny.
Find ideas saying why your potential investment won’t work or why it’s a bad investment. See if you can explain why they’re wrong.
These stress tests keep arrogance in check and elevate ideas above opinions.
Curtis "Wall Street" Carroll: How I learned to read - and trade stocks - in prison
I included Curtis last because he delivers an important message.
Investing is a privilege. I take it for granted sometimes, but it’s truly amazing.
Looking at the power of compound interest and I can’t help but be in awe of how incredible it is.
Not everyone has the capability to invest.
Not everyone has the understanding that you or I do.
Don’t take investing for granted. Use it to its full potential, but also teach someone else how to use it.
Open someone else’s mind to the power. Teach a friend or coworker.
Break it down into simple terms and teach a child.
More people investing benefits everyone. It’s not a zero-sum game.
Conclusion
Hopefully you were able to pull some great information out of those TED Talks like I was.
No, they aren’t giving you specific investing tactics, but learning about or own behavior and bias is almost as important as the investing tactics we choose.
Investing is a slow and steady race. That gives you a lot of time to think…and a lot of time to screw things up.
Education is our best weapon.
Did one of these stand out from the other? Any other recommendations that I should make sure to watch?
