Ep82: Daniel Schwartz – Take the Emotion Out of Investing

Daniel Schwartz is an author, senior executive and investor in sales, marketing, business development and management, with extensive contacts and relationships throughout Asia in many industries, through the intense networking and relationship-building he’s been doing over the past 20 years. As a co-founder of 3TNetworks, members and customers are empowered to build their wealth in both traditional and the emerging cryptocurrency arenas. His 3T Networks is a phenomenal business opportunity for people want to learn and grow. It focuses on financial education in cryptocurrency and forex product development, ICO consulting, Bitcoin over-the-counter activities and personal development products and training to help customers and members grow. Dan has significant experience in training, selling and networking, has developed seminars in all three of those areas, has emceed for international speakers and has hosted a monthly news segment on Channel 3 TV Thailand.

 

“I like to talk about winning and learning, not winning and losing and take the emotion out. And if you really want to do your own trading and your own investing, do the research, get the information from experts.”

Daniel Schwartz

 

Worst investment ever

Dan had some friends who were making considerable sums of money working in the investment research advisory business for specialist companies who promoted penny stocks. They would receive commissions on when and how many stocks were bought. One of his friends would call him and say: “Hey, Dan, take a look at this company.” Dan would read the very brief reports and buy around US$1,000 of stock at a time based on the little information provided and the recommendation of his friend.

He doesn’t remember any of the company names because he points out that the brain likes to block out such bad memories. Sometimes he would win, sometimes the prices would be stable, and sometimes he lost it all. It was an interesting experience, but he likens it more to gambling, because he didn’t really know what he was doing. On all those investments, he lost up to US$40,000 but he learned a lot. He says it was a very bad idea as an investment decision to be playing around with penny stocks put forward by people who were earning commissions.

 

Some lessons

  1. It is a very bad investment idea to trade in penny stocks. Especially when such stocks are promoted by people earning commissions.
  2. Trading is best left to the experts and other people.
  3. Know your own personality profile. Through that you can know also what kind of investing you should do, and which types of business or professions suit you.
  4. Stay away from the hype.
  5. Greed is not good. Wise people talk about the idea that the time to be fearful is when others are greedy or the time to be greedy is when others are fearful. Suffice to say, greed comes with it an emotional response, and that is not something that involves the part of the logical-thinking part of the brain.
  6. If something seems too good to be true, it probably is.
  7. Go with experts with verifiable track records that you can look at yourself. Read all the material available to do that verification. If talking about trading, go with someone who has a verifiable positive track record. Remember to check experts’ record also in a down market.
  8. Always remember – past performance is never a guarantee of future results. No one can predict the future and unexpected events that can have major impacts on your investment can be just around the corner.
  9. Listening to someone on commission, pitching you over the phone, is probably not the smartest idea when it comes to buying stocks or putting money into investments.

 

“Be fearful when others are greedy and greedy when others are fearful.”

– Warren Buffett, cited by Daniel Schwartz

 

Andrew’s takeaways

  1. Never invest when somebody calls you to introduce it. When somebody is calling you about an investment idea they are most definitely compensated in some way for doing that. People are not on the phone randomly calling people for the benefit of the receiver.
  2. Be aware that our minds can be hijacked by the excitement of promised “amazing” returns, such as the “50x” example that Dan gave. Penny stocks are a great example. Investing is truly a physical thing, causing a physical reaction and we do things based on human emotions and mental triggers that are often being exploited by phone salespeople.
  3. Make sure your interests are aligned with the people that are helping you with investing as best that you can. This can never be achieved perfectly but it’s something to always bear in mind.

 

Actionable advice

If someone calls you or approaches you with an investment idea, do not make a decision on the spot. If anyone pushes you to buy over the phone when you do not even know them, they are using all kinds of psychological tools to get you to act – such as playing on the human fear of missing out (FOMO) or using such manipulative psychological tactics as “the takeaway close” – run away and run fast.

 

No. 1 goal for the next 12 months

Dan would like to recover from the past 12 months of craziness in the markets and be in a position, personally and professionally, to take advantage of what is happening now, what has been learned with the markets in the crypto space, in Forex and in stocks. He wants to use that experience so he can help more people to be successful.

He also wants to watch his three-and-a-half-year-old son grow, spend time with him and try to instill in him knowledge so that when he gets old enough, he’ll have the benefit of Dan’s experience and past mistakes so that he can make a whole range of different mistakes.

 

Parting words

Be careful with your money, take the emotion out and think, and don’t let the greed part take over.

 

 

You can also check out Andrew’s books

Connect with Daniel Schwartz

Connect with Andrew Stotz

Further reading mentioned  

 

About the author, Andrew

Dr. Andrew Stotz, CFA is the CEO of A. Stotz Investment Research, a company that provides institutional and high net worth investors with ready-to-invest stock portfolios that aim to beat the benchmark through superior stock selection.

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