what about joy that was the original
title of this talk but nobody thought
people would realize we were going to
talk about money and investing if that
was title that was a little bit the
point why is that why is there such a
disconnect between money and joy we
ended with the title that was a take on
the perennial question can money make
you happy so much time and energy spent
on that question and we flipped it to
get to the heart of this talk and happy
make you money a way more interesting
topic to spend your time on can happy
make you money
what about joy and those are the
questions we are going to answer today I
have been in the financial services and
investment industry for over 20 years
almost 25 over the course of those years
you could have found me in roles from
trader to chief executive officer I have
had the responsibility of managing money
for large companies for institutions for
families for endowments as a woman in an
industry that has been tough for a woman
I have to admit that in the early years
I sort of tried to conform stay inside
the box but that changed over the years
the increasing disconnect between the
prescribed solutions on what we should
do with our money and its lack of impact
on human happiness really started to
jump off the page at me it was almost as
if the math of Finance and the science
on human happiness were operating in
parallel universes
in the 1990s Harry Markowitz won a Nobel
Prize for his work on portfolio choice
asset selection optimization the work
solved for a smoother ride by combining
many asset classes that were not well
correlated you could get about the same
return a smidge higher and the ride was
somewhat smoother less volatility in the
decades that followed the swirl of
activity around solving for that
question a smoother ride
got us more and more asset classes more
and more complexity harder and harder
for anyone to understand what was going
on creating more and more anxiety I
think we have been solving for the wrong
question or at a minimum an incomplete
question the fact is a smoother ride
does not make us happier and complexity
causes anxiety what if we were to solve
for a happier ride why does that matter
the journey matters we have this one
little bright bold beautiful life the
journey matters the journey matters for
us individually and the journey matters
for us collectively happiness brings out
the best in us a little bit of
scientific perspective comes from the
field of priming effects which are just
exposing participants to certain
conditions and seeing if that affects
how they answer questions participants
in a study who were shown images of
money together with participants who
were not shown images of money those
participants who were shown images
related to money and investing were less
likely to ask for help and they were
less likely to give help and in some
studies where the participants were then
asked to go into the next room and set
up chairs in order to have a
conversation and discuss the images that
they’d seen the participants who’d seen
images related to money and
Nantz went into that room and they set
up the chairs close to a foot and a half
further apart one foot three inches how
hard is it to communicate to build a
common understanding about anything when
the chairs are that far apart so how can
we come to a solution that bends that
curve the answer begins here rather than
staying inside our own little discipline
and drilling deeper and deeper into that
discipline down to the complex roots to
find the answer look up look out look to
other disciplines to inform a deeper
richer more complete answer so there are
hundreds of items in each one of those
sets enjoy the journey we could probably
all come up with about a million items
on that set quit your job and go hiking
in the Swiss Alps trouble is many of
those would not overlap with successful
investing in solid planning and
investing hundreds of ways to invest
short term long term algorithms hedge
funds the trouble is that many of those
approaches do not overlap well with what
we know about the science on human
happiness and the science on human
happiness we’re learning more and more
happiness brings us closer together
happiness makes us think better we know
anxiety is a roadblock to happiness so
how do we get to YES on the question can
happy make us money after 20 plus years
of investment experience and really more
importantly twenty years of listening
carefully to people and listening
carefully to what experts outside of my
discipline are saying and learning and
proving out I think the most compelling
overlaps
our simplicity and purpose simplicity
and purpose enable happiness simplicity
and purpose are present in people I have
met in my professional journey who have
really figured out how to enjoy the
journey and simplicity and purpose
absolutely work from an investment
perspective
so how does that look from an investment
perspective let’s start with simplicity
it is a passion item of mine
I think da Vinci spoke a profound truth
when he said simplicity is the ultimate
form of sophistication and I will tell
you a secret investing can be simple in
fact it probably should be simple my
experience has been simplicity improves
outcomes so how do we take that complex
mix and boil it down to its essence boil
it down to its simplest form we can’t
cover every element of that in this
forum but let’s get to the major
building blocks if we think about the
major building blocks
there are really two major jobs going on
in that complicated mix one of them is
the job of your safety blanket and one
of them is the job of growth assets that
will grow to help you fulfill your
aspirations your safety blanket this is
really important important to spend time
here maybe the majority of your time
there is no bigger roadblock to
happiness than anxiety and there’s no
sure way of triggering anxiety than risk
that is outside of your tolerance in the
Markowitz model the safety blanket is
the counterbalance to risky assets we
need to spend time here because your
perception of your risk tolerance
changes over time and over days
depending on how you happen to feel on
that particular day let me give you a
framework within which to consider this
and it’s just one thing but a framework
to consider equity markets correct 30%
once every 10 years and it’s normal for
an equity market to correct a 30% once
every 10 years think about if you had
all of your nest egg
exposed to that decline how would that
feel could you tolerate it for some of
the Ansar Bayt maybe yes it’s not about
making everything safe because growth
has a role to fill we all have
aspirations it’s about having enough set
aside so that you can tolerate the ups
and downs without the ups and downs
impinging on every single day and growth
so growth is weird the waters often get
muddied with asset classes and
international and emerging markets in
order to create some clarity let’s take
it up what is the job of the assets that
are supposed to grow well it’s to grow
and can we define that yes we can to
find that quite explicitly equities are
generally a large part of growth and
using that as a measure your growth
assets should be able to give you seven
to nine percent on average per year not
every year but overtime on average seven
to nine percent at 7% your assets will
double in ten years
and I know your next question is how do
I know if something can achieve 7 to 9
percent and that is not something that
we have enough time to cover in this
talk but I promise you it is informed by
simple things as well the simple things
that we all learned when we ran our
first lemonade stand so make it simple
make it straightforward simplicity
improves outcomes and simplicity
empowers us it is the math shaking hands
with the science and purpose I don’t
think we need any science for us to know
that a sense of meaning and purpose
fulfills us there are hundreds of ways
to invest lets choose out the ones that
have meaning and purpose to us think
about things you love importantly things
think about things you understand well
I’ve had clients for whom real estate
was their passion and their way of
making a positive impact on the world
I’ve had clients for whom their business
with their sense of fulfillment and also
their growth engine
choose a mixture and give it purpose the
investment industry has told us for
decades
what should make us happy beating
indexes diversification some distant
goal what does make us happy the actual
science on human happiness has not
really informed the approach and now it
can turn the model on its head ask a
different question
let simplicity and purpose be your
guides they can improve outcomes and
they empower us and yes happy can make
us money and with that maybe we can get
those chairs closer together and who
knows what will happen from there
[Applause]
you
title of this talk but nobody thought
people would realize we were going to
talk about money and investing if that
was title that was a little bit the
point why is that why is there such a
disconnect between money and joy we
ended with the title that was a take on
the perennial question can money make
you happy so much time and energy spent
on that question and we flipped it to
get to the heart of this talk and happy
make you money a way more interesting
topic to spend your time on can happy
make you money
what about joy and those are the
questions we are going to answer today I
have been in the financial services and
investment industry for over 20 years
almost 25 over the course of those years
you could have found me in roles from
trader to chief executive officer I have
had the responsibility of managing money
for large companies for institutions for
families for endowments as a woman in an
industry that has been tough for a woman
I have to admit that in the early years
I sort of tried to conform stay inside
the box but that changed over the years
the increasing disconnect between the
prescribed solutions on what we should
do with our money and its lack of impact
on human happiness really started to
jump off the page at me it was almost as
if the math of Finance and the science
on human happiness were operating in
parallel universes
in the 1990s Harry Markowitz won a Nobel
Prize for his work on portfolio choice
asset selection optimization the work
solved for a smoother ride by combining
many asset classes that were not well
correlated you could get about the same
return a smidge higher and the ride was
somewhat smoother less volatility in the
decades that followed the swirl of
activity around solving for that
question a smoother ride
got us more and more asset classes more
and more complexity harder and harder
for anyone to understand what was going
on creating more and more anxiety I
think we have been solving for the wrong
question or at a minimum an incomplete
question the fact is a smoother ride
does not make us happier and complexity
causes anxiety what if we were to solve
for a happier ride why does that matter
the journey matters we have this one
little bright bold beautiful life the
journey matters the journey matters for
us individually and the journey matters
for us collectively happiness brings out
the best in us a little bit of
scientific perspective comes from the
field of priming effects which are just
exposing participants to certain
conditions and seeing if that affects
how they answer questions participants
in a study who were shown images of
money together with participants who
were not shown images of money those
participants who were shown images
related to money and investing were less
likely to ask for help and they were
less likely to give help and in some
studies where the participants were then
asked to go into the next room and set
up chairs in order to have a
conversation and discuss the images that
they’d seen the participants who’d seen
images related to money and
Nantz went into that room and they set
up the chairs close to a foot and a half
further apart one foot three inches how
hard is it to communicate to build a
common understanding about anything when
the chairs are that far apart so how can
we come to a solution that bends that
curve the answer begins here rather than
staying inside our own little discipline
and drilling deeper and deeper into that
discipline down to the complex roots to
find the answer look up look out look to
other disciplines to inform a deeper
richer more complete answer so there are
hundreds of items in each one of those
sets enjoy the journey we could probably
all come up with about a million items
on that set quit your job and go hiking
in the Swiss Alps trouble is many of
those would not overlap with successful
investing in solid planning and
investing hundreds of ways to invest
short term long term algorithms hedge
funds the trouble is that many of those
approaches do not overlap well with what
we know about the science on human
happiness and the science on human
happiness we’re learning more and more
happiness brings us closer together
happiness makes us think better we know
anxiety is a roadblock to happiness so
how do we get to YES on the question can
happy make us money after 20 plus years
of investment experience and really more
importantly twenty years of listening
carefully to people and listening
carefully to what experts outside of my
discipline are saying and learning and
proving out I think the most compelling
overlaps
our simplicity and purpose simplicity
and purpose enable happiness simplicity
and purpose are present in people I have
met in my professional journey who have
really figured out how to enjoy the
journey and simplicity and purpose
absolutely work from an investment
perspective
so how does that look from an investment
perspective let’s start with simplicity
it is a passion item of mine
I think da Vinci spoke a profound truth
when he said simplicity is the ultimate
form of sophistication and I will tell
you a secret investing can be simple in
fact it probably should be simple my
experience has been simplicity improves
outcomes so how do we take that complex
mix and boil it down to its essence boil
it down to its simplest form we can’t
cover every element of that in this
forum but let’s get to the major
building blocks if we think about the
major building blocks
there are really two major jobs going on
in that complicated mix one of them is
the job of your safety blanket and one
of them is the job of growth assets that
will grow to help you fulfill your
aspirations your safety blanket this is
really important important to spend time
here maybe the majority of your time
there is no bigger roadblock to
happiness than anxiety and there’s no
sure way of triggering anxiety than risk
that is outside of your tolerance in the
Markowitz model the safety blanket is
the counterbalance to risky assets we
need to spend time here because your
perception of your risk tolerance
changes over time and over days
depending on how you happen to feel on
that particular day let me give you a
framework within which to consider this
and it’s just one thing but a framework
to consider equity markets correct 30%
once every 10 years and it’s normal for
an equity market to correct a 30% once
every 10 years think about if you had
all of your nest egg
exposed to that decline how would that
feel could you tolerate it for some of
the Ansar Bayt maybe yes it’s not about
making everything safe because growth
has a role to fill we all have
aspirations it’s about having enough set
aside so that you can tolerate the ups
and downs without the ups and downs
impinging on every single day and growth
so growth is weird the waters often get
muddied with asset classes and
international and emerging markets in
order to create some clarity let’s take
it up what is the job of the assets that
are supposed to grow well it’s to grow
and can we define that yes we can to
find that quite explicitly equities are
generally a large part of growth and
using that as a measure your growth
assets should be able to give you seven
to nine percent on average per year not
every year but overtime on average seven
to nine percent at 7% your assets will
double in ten years
and I know your next question is how do
I know if something can achieve 7 to 9
percent and that is not something that
we have enough time to cover in this
talk but I promise you it is informed by
simple things as well the simple things
that we all learned when we ran our
first lemonade stand so make it simple
make it straightforward simplicity
improves outcomes and simplicity
empowers us it is the math shaking hands
with the science and purpose I don’t
think we need any science for us to know
that a sense of meaning and purpose
fulfills us there are hundreds of ways
to invest lets choose out the ones that
have meaning and purpose to us think
about things you love importantly things
think about things you understand well
I’ve had clients for whom real estate
was their passion and their way of
making a positive impact on the world
I’ve had clients for whom their business
with their sense of fulfillment and also
their growth engine
choose a mixture and give it purpose the
investment industry has told us for
decades
what should make us happy beating
indexes diversification some distant
goal what does make us happy the actual
science on human happiness has not
really informed the approach and now it
can turn the model on its head ask a
different question
let simplicity and purpose be your
guides they can improve outcomes and
they empower us and yes happy can make
us money and with that maybe we can get
those chairs closer together and who
knows what will happen from there
[Applause]
you
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