Daniel Egan – Remember That Time is Your Greatest Asset

Daniel Egan is currently in charge of Behavioral Science and Investing at Betterment, where he integrates behavioral finance and passive investment management to help customers achieve their goals. He evolved from Behavioral Finance Specialist to the Director of Behavior Science and Investing. He researches into what drives, and how to prevent harmful financial behavior. This includes how to increase savings behavior, reduce speculation and increase planning by them more effectively powerful.  Daniel holds a Master of Science degree in Decision Science from the London School of Economics and BA (Distinction) in Economics from Boston University.  Daniel enjoys speaking to academic classes and industry conferences, and do it often.  In this episode, Daniel shares his worst investment story venturing in a double leverage Oil ETF that cost much more than his lost investment money but the value of his greatest assets---time and confidence.    “Always be aware that your time and your attention is a really valuable commodity.” – Daniel Egan What do you want to hear from the My Worst Investment Ever Podcast? Tell us here! Resources:  My Worst Investment Ever Book myworstinvestmentever.com Topics Covered:  00:43 – Dan’s professional and behavioral finance background 03:09 – Circumstances leading up to his worst investment ever: green shoots appearing from the oil industry during the financial crisis, big reserves of oil people that were kept offshore 04:02 – a double leverage Oil ETF called DXO, a vehicle to express Dan’s view that oil was going to be going up as things got better. 04:31 – A speculative play to take at least six months if not a year. 05:09 – Dan’s applying the things he knew from his behavioral finance background 05:25 – The lessons Dan learned from his investment experience 07:25 – Deutsche Bank backing out their sponsorship to DXO, they decided that it was way too much risk on their books 08:28 – Andrew’s takeaways from Dan’s experience 12:29 – Diversifying instruments versus the diversification benefit 13:35 – Dan’s actionable advice: Keep it simple. Main Takeaways Lesson 1: Be honest about position sizing versus cost. So you can have a great idea but you have to have a big enough margin that you're going to cover your transaction costs be it just commissions or taxes afterward.”– Daniel Egan Lesson 2: “You got to take into account how much it's going to cost you in indigestion, sleepless nights and how much it's going to take away from you spending time on your real job.”– Daniel Egan Lesson 3: “You have to really understand what you invest in. What I missed out on or with the cost that I didn't see was my time. I could have been doing something much more productive for a kind of like my earnings potential or my life at that point in time. I actually view it as like a pretty serious loss because I just like had an opportunity cost that was hidden.”– Daniel Egan Lesson 4: “You really have to think about the complete costs of an investment. And I think people often really overlook that there is you know we've already heard about the costs of the actual transaction. We've heard about the costs of taxes. We've also there's the cost of time and there's the cost of confidence.”– Andrew Stotz Lesson 5:  “Research what instrument are you investing in. There's a difference between having an idea and the instrument you use to execute that idea. Separate your idea from the instrument and study that instrument.”– Andrew Stotz You can also check out Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr.Deming’s 14 Points Connect with Daniel Egan: LinkedIn www.dpegan.com Connect with Andrew Stotz: astotz.com Linkedin Facebook Instagram Twitter Youtube My Worst Investment Ever Podcast