Table of Contents

1. Introduction
2. Summary of the Article
3. Handicappers and Horse Race Predictions
4. Influence of Social Media on Investing Decisions
5. Myopic Loss Aversion and Investor Behavior
6. Main Takeaways from the Article
7. Introduction of Scott Burney
8. Vault Brewing Company and Expansion
9. Managing Multiple Restaurants and Brewery Operations
10. Pandemic Impact on the Business
11. Hiring New Employees and Customer Feedback
12. Reviews and the Impact of Social Media
13. Final Thoughts and Advice

Introduction

Madison: Hello, everyone, and welcome to the 14th episode of Not Just Numbers, Honest Conversations with a Financial Advisor (and lawyer). I’m Madison Demora, and I’m here with Mike Garry. Mike is the financial advisor and CFP and the founder and the CEO of Yardley Wealth Management. He is also an estate planning lawyer and his law firm is Yardley Estate Planning. Hey, Mike.

Mike: Hey, Maddie. How are you?

Madison: I’m good. I’m good. How are you?

Mike: Good. It’s a beautiful fall day today. The last couple of times we recorded was pretty crappy outside.

Madison: Yeah. So, Mike, what would you like to discuss today?

Mike: You have that article about maybe the having more information isn’t actually a plus for people.

Madison: Yep. All right, so. It’s titled Ignorance Really is Bliss When it Comes to Investing, and that’s by Spencer Jakab. I’m going to read the summary and I’ll ask you some questions, and we’ll go from there.

Mike: That sounds great.

Summary of the Article

Madison: All right, so here’s the summary. The article discusses the idea that having more information in investing is not always beneficial and can even be detrimental. It begins by highlighting the excessive amount of data available to traders and investors today, from multiple screens to access to numerous analysts’ forecasts and opinions. Retail investors now have access to a wealth of information, narrowing the information gap with professionals. The article presents an experiment from 1973 where handicappers were asked to predict the outcomes of horse races. As they were provided with more information, their confidence increased, but their accuracy remained the same. This illustrates that having more knowledge doesn’t necessarily lead to better results. The article then mentions instances where detailed knowledge led to risky investment decisions, such as analysts at Goldman Sachs being overly confident about Enron’s prospects before its bankruptcy. It also highlights the issue of confirmation bias when investors seek out information that supports their existing beliefs. The proliferation of information through social media and smartphone apps is discussed as well, with the downside being that constantly checking accounts can lead to myopic loss aversion, where investors are more likely to see losses and react by trading more frequently, which can be detrimental to returns. In conclusion, the article suggests that in investing, it’s better to focus on a few key factors in a systematic way rather than drowning in excessive information. It also warns against following the crowd and emphasizes the importance of timing and not getting caught up in market craziness.

Handicappers and Horse Race Predictions

Madison: So how does the article question the value of having more knowledge in investing?

Mike: I think the article really questions the value. I mean, it’s great. It’s a very interesting article and I’d say it tends to be true in my experience. So people are always looking for some edge to beat the market or to pick some stock. And I can’t tell you how many times in the last 25 years somebody’s come up to me and said, hey, I know this about such and such stock. And the thing is, well, typically millions or tens of millions of people also know that. So it doesn’t provide any kind of advantage. And the other thing is often that little piece of news or little nugget is lost up in a much other broader news about the company. And it might not be enough for the company to go up like the way that the person thinks. So it is interesting that more information has not led to better results. It’s really counterintuitive, but I find it to be true.

Influence of Social Media on Investing Decisions

Madison: How does the article highlight the influence of social media and online communities on investing decisions? What psychological bias does it mention?

Mike: Sure. So it mentions confirmation bias. So one of the dangers, right, in crowdsourcing your investments, you know, following somebody on Reddit or when people are talking about GameStop, is that in social media, you tend to see stuff that you want to see, and it will confirm whatever bias you have. You’re not likely to see negative information presented. And that could be bad. Right? Like, if you want to know that the pros and cons of whatever you think about investing, if all you see are cons, I mean, if all you see are pros, that will lead you to be overly confident and maybe make a riskier bet or a gamble than you otherwise might have.

Myopic Loss Aversion and Investor Behavior

Madison: Okay. What is myopic loss aversion and how does it affect investors?

Mike: Yeah. So myopic loss aversion is when somebody is too focused on losses and doesn’t want to have them. So if they’re looking at your statement, when people look at their statements, they’re more likely to notice what has gone down for them. And if they look at them too much, they’ll want to do something about that. And it causes people to trade more often. And there’s lots of studies that show that people who trade more have worse relative performance than people who don’t trade more. So trading is not necessarily a good thing. Again, there’s a lot of counterintuitive stuff in investing, Maddie.

Main Takeaways from the Article

Madison: Yes, absolutely. What is the main message or takeaway from this article?

Mike: The main takeaway is that more information is not necessarily beneficial. And there’s a couple, couple of reasons why. You know, first, it makes people do, if people have more information, or especially if they think they have inside information, it makes them, it opens them up to taking riskier bets. So instead of looking at their overall portfolio and the diversification they need, they are more likely to take bets and do something outside of whatever their financial plan is…

Introduction of Scott Burney

Madison: We are joined here today with Scott Burney. Scott is the managing partner of The Vault company here in Yardley. Scott, would you like to explain to our listeners what you do for a living? A little background about yourself?

Scott: Yeah, so what I’m doing now is I’m running Vault Brewing. And Vault Brewing has its original restaurant and brewery on 10 South Main street in Yardley that opened in October of 2012. So going on eleven, this is our 11th year. And then in addition to that, we kind of outgrew our space there as far as brewing goes. And we have a location up on College Avenue, just two blocks, basically away, that houses our production facility, our main production facility for our brewery…

Vault Brewing Company and Expansion

Scott: We have a few other restaurants since then. The first was Pretty Bird Coffee Roasters, and that’s at 7 South Main. So just across the street from the original location that opened, it’s going on almost eight years now. So that has been around a staple in Yardley on Main street as well, for quite a few years…

Managing Multiple Restaurants and Brewery Operations

Scott: Day to day is the brewery operation starts at an early hour, which is more my speed. Day to day. We’ve got, like I said, five different restaurants dealing with the managers, dealing with payroll, dealing with employee issues, because we have close to 100 employees across all the businesses. The age is probably about half of mine on average…

Pandemic Impact on the Business

Madison: How did the pandemic affect your business?

Scott: Well, thankfully, Jim was running, Jim Kane was running the business then. But being in town, I was heavily involved in being an extra help set of hands. It, you know, the restaurants were, you know, basically completely shifted to takeout…

Hiring New Employees and Customer Feedback

Scott: It’s busy, and it’s definitely something new every day. I like, honestly, I can’t stand when people, you know, I wish people would, the good people would stay with us. But I do like the interview process with new people, and it’s a little tedious because it’s very hard to get good people. But when you see them and you talk to them, you know, it’s, it’s interesting to see their life stories at, you know, 20 to 30…

Reviews and the Impact of Social Media

Mike: Scott, two years ago, I don’t know if I ever told you this, but two years ago, somebody, a troll on Google, gave us one star and said all kinds of harsh words about us. We had never had any contact with that person. The posting at time, they posted it from Ukraine and there’s nothing that we could do…

Final Thoughts and Advice

Madison: If you could go back to your 18 year old self with one piece of advice, what would it be?

Scott: Well, like Mike said, I have, you know, 25 year old, 21 year old. I would have taken the summer off after graduating and done something fun as opposed to starting work five days after I graduated. I would have taken that summer, but not more…

Madison: Just the right amount of time. All right, so we know your time is incredibly valuable, and we greatly appreciate you spending time with us. For those watching and listening and want to learn more about the Vault and all the other businesses, where is the best place they could find you guys?

Scott: I would either go to go to social media or, you know, really Instagram, Facebook, or just stop in at 10 South Main street, and you can see the other businesses from there.

Mike: And our business from there!

Scott: Yep.

Mike: Scott, thanks so much. This has been great.

Scott: Thank you.

Madison: Thank you, Scott. Thank you so much. For more information on Yardley Wealth Management or Yardley Estate Planning, you can visit our website at yardleywealth.net and yardleyestate.net. You can also follow us on socials at Yardley Wealth Management. This podcast has been produced by Madison Demora and Mike Garry with the technical and artistic help from Poe productions.