TALKING FINANCE with Michelle Higgerson of Baiocchi Griffin Private Wealth LIFE LESSONS Recently I was a bystander to a curious question asked of a peer; "what advice would you give to your fifteen-year-old self?". After some reflective thought, and a warning that the conversation could potentially go to a deep and dark place, the answer given was reduced to three key lessons: 1. Listen to your father and actually get the brakes on your car fixed - this may have avoided the accident that saw the prized car being damaged irreparably. 2. Look after your joints, particularly your knees and your back, because it's not much fun when they fail you, together or separately, and 3. Buy bitcoin when it was trading at only $USD500 per coin - given its current price per coin is just over $USD100,000, you'd be a millionaire from that investment by now. All worthy answers I thought, and while we all go through life, living and learning from our mistakes, this last piece of advice to the younger self seemed to dismiss the fact that everything is obvious in hindsight. If we all had the benefit of impeccable foresight, life would be a simple breeze. - Thinking about the common desire of having a crystal ball when investing, something many investors succumb to is hindsight bias - the tendency to look back on past predictions as being more accurate than they were, or considering events as being more foreseeable than they were at the time. Hindsight bias makes investing look easy, because if opportunities and crashes look obvious in hindsight then they should be easy to spot in the current moment. Unfortunately, hindsight bias can evolve into overconfidence in one's abilities, leading one to overlook risk and fall under the illusion that history repeats itself exactly. Too often investors will view the past and wonder why they didn't buy bitcoin/Amazon/Apple/Nvidia/any other success story of history and make an unresearched and uninformed investment in a small, speculative penny stock, expecting it to do the same, if not better. Rarely, however, do investors apply hindsight bias on the sell side, such as the failure to recognise issues and act prior to things turning south, such as retaining shares in Slater and Gordon throughout its dramatic fall from grace - who really could have foreseen or known that was to happen? Ironically, this scenario is where financial loss is real rather than just hypothetical, and therefore more damaging. So, thinking about an answer to "what advice would you give to your fifteen-year-old self?", perhaps the quote from author Judy Belmont is more helpful; "forgive yourself for not having the foresight to know what now seems so obvious in hindsight" - helpful advice for investing, and perhaps life more generally. AW7447694 BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1, 462-464 Peel St, Tamworth NSW 2340 6766 9000 AFSL No 424658 This article is general in nature and does not take your individual situation into account. You are advised not to act on anything contained herein, or discussed as a consequence of the contents of this document, without receiving financial advice from a suitably qualified person such as a financial planner, lawyer or accountant. Follow us on Twitter @BaiocchiGriffin facebook.com/Baiocchi Griffin Private Wealth Find us on Facebook www.bgprivatewealth.com.au TALKING FINANCE with Michelle Higgerson of Baiocchi Griffin Private Wealth LIFE LESSONS Recently I was a bystander to a curious question asked of a peer ; " what advice would you give to your fifteen - year - old self ? " . After some reflective thought , and a warning that the conversation could potentially go to a deep and dark place , the answer given was reduced to three key lessons : 1. Listen to your father and actually get the brakes on your car fixed - this may have avoided the accident that saw the prized car being damaged irreparably . 2. Look after your joints , particularly your knees and your back , because it's not much fun when they fail you , together or separately , and 3. Buy bitcoin when it was trading at only $ USD500 per coin - given its current price per coin is just over $ USD100,000 , you'd be a millionaire from that investment by now . All worthy answers I thought , and while we all go through life , living and learning from our mistakes , this last piece of advice to the younger self seemed to dismiss the fact that everything is obvious in hindsight . If we all had the benefit of impeccable foresight , life would be a simple breeze . - Thinking about the common desire of having a crystal ball when investing , something many investors succumb to is hindsight bias - the tendency to look back on past predictions as being more accurate than they were , or considering events as being more foreseeable than they were at the time . Hindsight bias makes investing look easy , because if opportunities and crashes look obvious in hindsight then they should be easy to spot in the current moment . Unfortunately , hindsight bias can evolve into overconfidence in one's abilities , leading one to overlook risk and fall under the illusion that history repeats itself exactly . Too often investors will view the past and wonder why they didn't buy bitcoin / Amazon / Apple / Nvidia / any other success story of history and make an unresearched and uninformed investment in a small , speculative penny stock , expecting it to do the same , if not better . Rarely , however , do investors apply hindsight bias on the sell side , such as the failure to recognise issues and act prior to things turning south , such as retaining shares in Slater and Gordon throughout its dramatic fall from grace - who really could have foreseen or known that was to happen ? Ironically , this scenario is where financial loss is real rather than just hypothetical , and therefore more damaging . So , thinking about an answer to " what advice would you give to your fifteen - year - old self ? " , perhaps the quote from author Judy Belmont is more helpful ; " forgive yourself for not having the foresight to know what now seems so obvious in hindsight " - helpful advice for investing , and perhaps life more generally . AW7447694 BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1 , 462-464 Peel St , Tamworth NSW 2340 6766 9000 AFSL No 424658 This article is general in nature and does not take your individual situation into account . You are advised not to act on anything contained herein , or discussed as a consequence of the contents of this document , without receiving financial advice from a suitably qualified person such as a financial planner , lawyer or accountant . Follow us on Twitter @BaiocchiGriffin facebook.com/Baiocchi Griffin Private Wealth Find us on Facebook www.bgprivatewealth.com.au