At a recent Berkshire Hathaway annual shareholder meeting, Warren Buffett shared his thoughts on why he sees financial advisors as the worst people to trust with your money.

Buffett believes that financial professionals in aggregate can’t do better than the aggregate of the people who just sit tight.

David agrees with Buffett’s view on active versus passive investing.

According to David, Buffett’s point of view and approach don’t account for the high cost of investor behavior.

The fact that 90% of investment decisions are driven by emotions is a big problem David sees in Buffett’s line of thinking.

David sheds light on what has become known as the Prospect Theory.

What leads “DIY investors” to buy high and sell low, instead of buying low and selling high as logic would suggest? David shares his thoughts on the matter.

Adopting an index-based, Do-It-Yourself, motion-driven approach to investing will make you less likely to remain invested during extreme market volatility. 

For David, one of the main purposes of a financial advisor is to hold your hand and keep you invested during jittery periods in the market.

 

Mentioned in this episode:

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

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Warren Buffett

Berkshire Hathaway