Thoughts on Record: Podcast of the Ottawa Institute of Cognitive Behavioural Therapy

Scott Nations: The Role of Cognitive Distortions in Investing

June 27, 2022 Season 3 Episode 13
Thoughts on Record: Podcast of the Ottawa Institute of Cognitive Behavioural Therapy
Scott Nations: The Role of Cognitive Distortions in Investing
Show Notes

Investing and management of finances is often a source of considerable distress for many individuals.  Investor, CIO & author, Scott Nations, joins us for a discussion of some of the core themes discussed in his new book, The Anxious Investor.  In this conversation we cover:  

  • why Scott wrote The Anxious Investor
  • the evolutionary basis of investing behavior   
  • loss aversion as a central driver of irrational behavior in the context of investing
  • lessons from the mathematics of the stock market that can be applied to day-to-day decision making 
  • the role of cognitive distortions with respect to irrational behavior and decision making in the context of investing with discussion of specific examples
  • consideration of financial tools (e.g., exchange traded funds) that might help investors navigate  their own cognitive distortions
  • the psychological reality of "beating the market" and whether investing can truly be a "meritocracy"
  • why it is difficult to learn from previous bubbles that frequently seem so predictable 
  • Scott's view of the key behaviors that investors should veer away from, moderate etc. to manage anxiety related to investing
  • evaluation of cryptocurrency, NFTs and other emergent financial entities from a psychological perspective
  • how  mood affects investing behavior  
  • a consideration of how AI-driven investing may have changed the psychological landscape for the investor
  • a discussion of whether the average retail investor is psychologically positioned to manage their own investment portfolio effectively given the cognitive distortions to be navigated 
  • Scott's take on designing the perfect investing mindset  

The content contained in this episode is for general information only and should not be regarded as financial or investment advice.  

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Scott Nations is the President of Nations Indexes, Inc. and a bestselling author. Scott also spent a decade as a Contributor to CNBC and regularly appears on-air to discuss markets, current economic events, and the outlook for a variety of financial vehicles.   Scott founded Nations Indexes in 2014. Nations Indexes is the world’s leading independent developer of volatility and option enhanced indexes and investment vehicles. Nations Indexes created the methodology used in the Nasdaq-100 Volatility Index (ticker symbol VOLQ). Futures on VOLQ launched on the Chicago Mercantile Exchange on October 5, 2020.  Scott is also the developer of the Nations suite of large-cap volatility indexes including VolDex® (ticker symbol VOLI) and TailDex® (ticker symbol TDEX), the first measure of the market’s expectations for a “tail event” or steep drop in prices. In addition to these indexes, Nations Indexes has also created a number of option strategy indexes which combine equity indexes and other underlying asset classes with unique option strategies which generate unique risk/return profiles.  Prior to founding Nations Indexes, Scott was a member of the Chicago Mercantile Exchange and was a market maker and floor manager for a leading index option trading firm.  Scott is the author of A History of the United States in Five Crashes, a general interest history of the five modern stock market crashes (1907, 1929,1987, 2008 and the Flash of 2010) which was published by HarperCollins in June 2017. Scott is the author of Options Math for Traders, published by Wiley & Sons in 2012 which was an bestseller. He is also the author of The Complete Book of Option Spreads and Combinations, published by Wiley & Sons in October 2014.
Twitter: @ScottNations