The Most Painful Part Of Investing

September 21, 2019

On this week’s show, Karl welcomes guest Justin Pawl, CFA to the studio to discuss a topic most would rather avoid, losses. Nobody likes to lose money, but it’s part of investing. Justin explains the best way to handle it.

Karl Eggerss:                      Hey. Good morning, everybody. Welcome to Creating Richer Lives. My name is Karl Eggerss. Just a reminder, you can give us a call at (210) 526-0057, and our website is

Karl Eggerss:                      This show is brought to you by Covenant. Lifestyle, legacy philanthropy, and of course, at Covenant, our goal is to unburden clients from the daily cares of financial management. So again, if you need any help or you know somebody that does, (210) 526-0057 or, and you’ll notice on there that we have a lot of information right on the front page now, including the podcast. We have our Chief Investment Officer’s weekly blog on there. We have articles, we have radio interviews, television interviews, all in an effort to help you get a little more educated about the financial markets, financial planning, and anything else going on in your life in the financial realm.

Karl Eggerss:                      So, we do have a guest in studio today, which we will get to in just one minute. We did have some interesting things this week. The two biggest things that happened earlier in the week was, of course, we had the drone attack in Saudi Arabia. Course, took a lot of the oil production offline. We saw oil prices spike Sunday night. The futures popped up over 17%. It was one of the largest jumps, I think, if not the largest jump ever. Kind of stabilized Monday, as we heard rumors about when they might come back online. Oil’s in the 10 to 12% range up pretty huge day and I think it finished up around 14%. and of course, the next day, they came out with comments, they being Saudi Arabia, “Hey, we’re going to be able to put those back online sooner than we thought.”

Karl Eggerss:                      Oil prices came down a bit, but still a pretty big shock to the system and pretty scary when you think about how it actually happened in this new age of technology and warfare, given that this was a drone attack. The other thing that happened, you might’ve heard a little bit about it, was the federal reserve, which of course, they have a targeted rate, and as of Tuesday, they had a rate between two and 2.25% was their overnight lending rate.

Karl Eggerss:                      That repo rate, they call it, jumped as high as 9%, roughly, on Monday, Tuesday, and I believe even came down a little bit on Wednesday. This caught everybody’s attention because this overnight lending rate spiking reeked of something that we may have seen during the financial crisis in 2008. And a lot has been written about it. A lot of fear-mongers out there saying, Oh my gosh, something is broken in the system. After a tremendous amount of research here at Covenant, the bottom line is that there was more demand for cash and not enough supply. That was number one. That is really the reason for it.

Karl Eggerss:                      And partly why there wasn’t enough cash is because this all goes back to the financial crisis. After 2008, of course, the banks were right in the heart of it, all the regulations changed. Banks are now required to keep a ton of money sitting around. They have a lot of ratios to make sure they’re liquid right? They’re too big to fail, so they have to be very, very liquid. And so, there was a need for cash. They simply didn’t have it. They had to go borrow the money and that caused rates to spike up.

Karl Eggerss:                      Now, there’s a lot of reasons why that … Why did they need the money? The fear was, is a hedge fund blowing up or what is going on? Lot of reasons. Some blame it on corporate tax payments coming up and the bank, the corporations needed money to make those payments, so they were pulling money out of the banking system too quickly. Of course, we had the oil prices spiking. So again, that could have had some repercussions with some financial entities maybe. And we’ve also seen companies that were issuing a lot of debt, taking advantage of low interest rates and so some of the banks may have bought those bonds, leaving them short of cash.

Karl Eggerss:                      These are all reasons why that could have happened, but at the end of the day, it was probably more of a technical glitch. And I would say one symptom, you know, if your child sneezes, you don’t go rush and do surgery, right? You wait for the second sneeze, you wait for a fever. This was a symptom we had to figure out why this was going on, but many believed it was a technical glitch.

Karl Eggerss:                      And furthermore, we did not see any volatility in terms of the stock market. We didn’t see the volatility index spike up. We didn’t see credit spreads bust out, as they would say. We didn’t see gold move dramatically. The “safe haven” BitCoin, of course, which it’s not. We didn’t see that move. So, we didn’t see any repercussions. This was pretty much confined to the banks of this lending. So, the federal reserve came in and injected money back into the system. So really, a lot of it has to do with the 2008 regulation.

Karl Eggerss:                      Now, to help maybe give an analogy to this and put it into even more layman’s terms, Justin Pawl, P-A-W-L, not to be confused with another Justin Paul of having two first names, right? P-A-U-L. So, Justin Pawl is the Chief Investment Officer at Covenant. Excited to bring them in. We talk pretty much 24/7 about the markets. It’s very fun to be teaming up with you now, getting different perspectives, collaborating on a ton of stuff. Welcome to your first ever … Well, it’s probably your first ever podcast, but certainly to the Creating Richer Lives podcast.

Justin Pawl:                       It certainly is, Karl. Thank you so much for having me here today. It’s a real pleasure to sit down and talk with you about what we’re seeing in the economy and some of the behavioral finance stuff that we’re going to get into a little bit later. But when it comes to this banking situation, we heard from a lot of different clients, we heard … or we read in a lot of different media outlets that, “Hey, the financial system’s fracturing. It’s 2008 all over again. Should I pull my money from equities?”

Justin Pawl:                       And you did a great job of explaining the technical aspect of it and the fact that banking system’s tremendously complex, and so to try to distill it down into something that, hopefully, my mom can understand would be to make the analogy to a household that has a banking account. They have a savings account and they have a checking account. And let’s say, hypothetically, that this household has $5,000 in their checking account and maybe only $50,000 in their savings account.

Justin Pawl:                       And this household experiences some sort of calamity in the house where a pipe breaks, water goes everywhere. They had to pay service providers to come and repair the pipe, repair the damage that transcended from that pipe burst, and they stroke a check for $6,000. Now, $6,000 is more than they have in their checking account, but it’s not more than their overall net worth. So while the check might bounce or be an overdraft charge for having written that check, the fact is the household is not insolvent.

Karl Eggerss:                      They had the money. They needed to move it from one pocket to another, and it was really a cashflow timing issue more than anything.

Justin Pawl:                       That’s exactly right. And it wasn’t systematic … or it wasn’t system-wide in the banking system. It was probably one bank, or maybe a small group of banks that experienced liquidity squeeze. And so, the media and the headlines that came out about, “This is the end. Here we go again.” It was just misplaced. It caused a lot of unnecessary fear in the marketplace.

Karl Eggerss:                      Yeah. And it did. And look, anytime you have a chart that has a little squiggly line on it and at the very end it shoots straight up, it’s a concern, right? It’s looks like … Go look at an oil chart. Something’s going on. And so, it is something to investigate in, and everybody did, but I would caution you and I caution you almost every week, where are you getting your information from in terms of the folks that feast on doom and gloom and bear markets and that sells the headline risk and all that fear-mongering does sell and it gets media attention.

Karl Eggerss:                      And so, a lot of those folks were out there like, “Here we go, 2008,” but a lot of the levelheaded folks that look at this objectively and agnostically, all agreed that this was more of a technical glitch and you saw as the week progressed, it calmed down a little bit.

Karl Eggerss:                      Is it something for us to investigate? Absolutely. You don’t ignore something like that, but you have to see the reasons why, and the world has dramatically changed pre-2008 and post-2008. It is very different now.

Justin Pawl:                       Very different.

Karl Eggerss:                      Yeah, so thanks for commenting on that because that was a big item this week. The reason I wanted to bring you in this week was, you know, we talk … Really, our goal here is to help people become better investors, better with their money from a financial planning aspect, and really, again, we call it Creating Richer Lives because whatever your goals are and whatever you want to do with your money, how do you optimize that and make it better? One of the biggest things we do is help people not make certain mistakes. And a lot of these are psychological mistakes. In our world, it’s called behavioral economics, behavioral finance, but these are common mistakes we see.

Karl Eggerss:                      And by the way, Justin, you and I are humans that may have these feelings. Like, I don’t like seeing the market go down 3% in one day. I don’t like that. I own equities. You own equities, clients … We don’t like that, but what we do know is what sometimes that leads to or doesn’t and what to do about it, or more importantly, what not to do about it. So, I wanted to bring it here and talk about a few different mistakes you see that are pretty common in and then really put some practical examples around it or case studies or whatever you want to call it so that people listening can say, “Yeah, I’ve done that. I need to stop doing that.”

Justin Pawl:                       And we’ve all done that.

Karl Eggerss:                      We’ve all done it. We have, and you and I, the only reason that I think we’ve learned from it, it’s probably because we’ve been doing it a hundred times more than the people listening because we’re dealing with so much money on a daily basis and we’re dealing with a lot of people’s emotions.

Karl Eggerss:                      We have all types of clients, right? All over the spectrum.

Justin Pawl:                       All over the spectrum, and every human being is different.

Karl Eggerss:                      Absolutely. So, let’s start with just the broad, I guess the aspect of this, and then we can get into to maybe a couple of examples of-

Justin Pawl:                       Sure.

Karl Eggerss:                      … put a name on them, so to speak.

Justin Pawl:                       Sure, sure. So, behavioral finance at its core is the application of psychology to how financial decisions are made. In other words, is the process that your brain goes through when you’re trying to make a decision around something that is related to finance. The difference between traditional financial models and behavioral financial models is that in

Justin Pawl:                       Traditional financial models, people are assumed to be rational, that they’re logical. They’re going to make decisions that are in their best financial interests.

Karl Eggerss:                      Sure.

Justin Pawl:                       Behavioral finance in the other side or other hand considers the people to be normal. That is their decisions are made in the context of their experiences, their preconceived notions, their influences throughout their life. It’s not… They’re not automatons.

Karl Eggerss:                      These are biases.

Justin Pawl:                       They’re absolutely biases because human beings are not computers. We’re not ruled by zeros and ones that binary switches that turn on and off. Our brains are tremendously complex and there’s a lot of power in that, but there’s also a lot of room for making mistakes within that power.

Karl Eggerss:                      Yeah, and I think that’s interesting because as we obviously get more technologically advanced, we can use computers to help us to at least say this is what you should be doing because the computer is not taking emotions into it. It’s only taking numbers, so it tells us the answer and a lot of times our financial planning tools do that. We know what the right answer is to optimize somebody’s finances. However, we do have to take in consideration their history, their emotions, their experiences. If somebody had a horrible experience in ’08, I can’t ignore that they went through that.

Justin Pawl:                       That’s right.

Karl Eggerss:                      So we have to be sensitive to that, even if we know what the right answer is in terms of stock allocation, for example. Let’s explore that a little further. So what would be the name of, a common name of one of these biases we’ll call them, or mistakes, if you will?

Justin Pawl:                       Sure. One of the ones that most people are probably familiar with is loss aversion. Not necessarily that they know the technical name of loss aversion, but essentially human beings has been shown throughout a number of different research studies. People hate to lose twice as much as they like to win, and that has some very important implications for how they make decisions in life.

Karl Eggerss:                      Yeah. So you’re basically saying if somebody would rather… The joy of making $10,000 is not as great as the magnitude of fear if they lost $10,000 like you’re experiencing twice the negative feelings about that.

Justin Pawl:                       That’s exactly right. For example, Karl, if I gave you the option of investing $50,000 and you are guaranteed a return of $51,000, so a $1,000 profit; or you had a 50-50 chance of getting back $70,000, a $20,000 profit; or only $35,000 meaning you’re losing $15,000, what is your immediate reaction to what you would like to do in that situation?

Karl Eggerss:                      So let me clarify that. You could lose 15 or you could make 20-

Justin Pawl:                       Yep.

Karl Eggerss:                      … and you have a 50-50 chance of doing that.

Justin Pawl:                       That’s right.

Karl Eggerss:                      Or I get a thousand bucks, no questions asked I’ll walk out the door. Which one would most people take? Probably the 51,000, I would say.

Justin Pawl:                       Yeah, that’s right, but if you actually do the math around it from a statistical standpoint, from a probability-weighted standpoint, the second investment is actually superior because statistically you should get $52,500. That’s the expected outcome. Yet people would much rather avoid the potential for a loss and steer towards the sure thing of earning $1,000.

Karl Eggerss:                      Yeah, and there’s software out there that asked these types of questions now in our industry. They’re good questions to ask because people don’t ever think about it like you hear a lot of people say, “How much can somebody afford to lose percentage wise?”

Justin Pawl:                       Yeah.

Karl Eggerss:                      Well, I wouldn’t want to lose more than 15%. That doesn’t really help because I didn’t put any context around it and number two, it doesn’t put real dollars to it.

Justin Pawl:                       That’s exactly right.

Karl Eggerss:                      So what you did in your example is to say, “When I walk away with a thousand, then I would be giving up a potential 19,000 extra dollars.” Like you said statistically, it comes out better even with a 50-50 chance, which is a random-

Justin Pawl:                       Coin flip.

Karl Eggerss:                      Yeah, coin flip, exactly.

Justin Pawl:                       Exactly. The way this plays out in terms of investing is it’s somewhat counterintuitive because when people are afraid of losing money, they’re more likely to sell their winners too soon. So let’s say you have a stock, XYZ stock, it’s gone up 10%, most human beings have a natural bias towards wanting to crystallize that gain, sell that stock, realize that gain and move on. So with a losing position, because people are afraid of losses, they’re afraid to admit a mistake by selling the position. They’re much more likely to hold onto that position. Regardless of the financial prospects for the stock, they might be down $10,000 in the stock. They think, hey, it’s going to go back and I’m going to get back to break even. They’re very afraid, very concerned, mentally it causes them to be distressed is the word I’m looking for there, mental distressed to actually admit the mistake that they made in making that investment and to realize that loss.

Karl Eggerss:                      I have a question for you. Do you know what the difference between an unrealized loss and a realized losses?

Justin Pawl:                       I do technically, but I’m thinking you’re going somewhere else.

Karl Eggerss:                      The realized losses is the one you tell your wife about.

Justin Pawl:                       Very good.

Karl Eggerss:                      I’ve heard it said there’s an old probably a saying on Wall Street that when you’re holding a losing position that you know you should not be in, you know the fundamentals have changed, it’s just not a good deal at this point, it’s called pain to be right. It kind of goes into this other finance term called anchoring, which is holding onto like where you bought the stock. Because you’re down on it, really doesn’t matter where you bought it. That has no bearing. Wall Street does not care where you, Justin, bought your stock. It’s worth what it’s worth for a particular reason. Now it may be undervalued or overvalued, but where you bought it is meaningless. A lot of people anchor and they hold on to that cost basis. If I put 10,000, I got to get back up to 10 at least and then I’ll get out. That has nothing to do with the strategy. That is not a good strategy.

Justin Pawl:                       No. That’s one of the worst strategies. When you do anchor-

Karl Eggerss:                      It’s common.

Justin Pawl:                       It’s absolutely common as is this loss aversion situation. The reason loss aversion is so damaging to the long-term ability to compound wealth is that when you’re selling winners too fast and you’re holding on to losers too long, you’re losing both ways in your portfolio. Everybody knows that not every investor is going to get every investment decision right. It’s important that you maximize those gains on your winners and that you cut your losers as soon as you can.

Karl Eggerss:                      I’ve got a lot of Wall Street scenes in my head. One of them that sticks out is you don’t always trim the flowers to water the weeds. There’s some people that are quick to take profits on their gains and they don’t want to have a losing position. So they take those profits and they keep adding to their losers, which there is a benefit sometimes of dollar cost average and of course into something that’s down.

Justin Pawl:                       Absolutely.

Karl Eggerss:                      Just to simply do it because you’re down is not the right answer, and a lot of people do that. It’s called trimming the flowers to water the weeds.

Justin Pawl:                       I like that. It’s a good one.

Karl Eggerss:                      Yeah, and just like why would you buy a stock when you’re up 20% on it. Well, what if there’s some new news and it’s undervalued? You may be just as good averaging into that stock that’s up already versus taking that money and adding to a stock that you’re down on.

Justin Pawl:                       Yes, and that’s exactly right, but you’re applying logic to the situation, right? Most people divert to their or revert to their emotional bias around it.

Karl Eggerss:                      Absolutely.

Justin Pawl:                       That’s where the behavioral finance is so important is we try to educate our clients about these behavioral biases to make them better investors. Karl, you and I, we mentioned this before, I mean, we’re subject to these behavioral biases like anybody else’s. However, by studying them, by understanding them, by experiencing them, we’re able to overcome a lot of that, take a more clinical approach to the market so that we’re not driven by the swings of the market to allow to drive our emotions to swing just as why, because that’s no good for anybody.

Karl Eggerss:                      No, it’s not, and it’s interesting because I do believe people are kind of wired a certain way. I mean, you’re going to get some people that are just a little more conservative, a little more aggressive they’re wired. Also, I believe their past experiences play a huge part in this. It’s not just necessarily they made a bad decision four years ago in their portfolio. It could be their upbringing. I will ask clients that sometimes, like tell me about growing up, like what did it look like in your world, did you talk about money at the dinner table or, and it may come out that father was a habitual gambler or… In my experience, and I’ll tell you because my father passed away when I was seven, my mother therefore kind of went in protection mode in terms of keeping what she had because also she’s a single mother with three young kids.

Karl Eggerss:                      CDs at the time in the late ’70s were paying a tremendous amount, so she was always very scared of the stock market. It took me coming into the profession to teach her and to show her you can actually make good money in a safe manner longer term. So it was her experience that she grew up kind of conservative and her situation made her more conservative than perhaps she should have been. So I like to have those conversations and for those listening really examine that. Think about what was my upbringing? Did I have a family that invested? Because more than likely if you did, you saw how that went and you are comfortable with it.

Karl Eggerss:                      So past experience plus not only that upbringing but, again, looking back to the ’08. One thing we ask our clients when they first come in is tell me what you did in 2000 through the 2002 bear market, in the 2007 through 2009 bear market.

Justin Pawl:                       Tremendously illuminating.

Karl Eggerss:                      Not how did you feel, what did you do? We have answers that range from, I sold and I’m still trying to figure out how to get back in. Then on the other end it’s, I didn’t do anything; I just kept buying. That tells us everything we need to know about their risk, but it’s a great teaching moment. So why did you sell? Why didn’t want to lose it all? Let’s examine that.

Justin Pawl:                       Exploring that with clients is so much better than a risk questionnaire because it’s very easy in a theoretical sense to answer, hey, if the stock market is going down, I know I’m going to be a buyer because their prices are better here now than they were a month ago or two months ago. If you go back, and you remember what happened during the financial crisis, people were scared. People thought that the financial markets were unraveling and that [crosstalk 00:21:22].

Karl Eggerss:                      They were unraveling, but they also unraveled in the great depression.

Justin Pawl:                       Yes.

Karl Eggerss:                      I mean, when we will look at the stock market, not in the past four years or five years, when we look back the past 100 years, we’ve got a lot of different scenarios in there. What I know is that stocks are near an all time high right now.

Justin Pawl:                       They are. They are at all time high right now.

Karl Eggerss:                      That tells me everything I need to know right there.

Justin Pawl:                       No, you’re right, but not every downdraft in the market is a buy necessarily. Timing is everything, and it’s about turning off those emotional switches and taking a more fundamental, rational approach in evaluating the data to make a decision about when is the right time to get back in.

Karl Eggerss:                      Sure, yeah, which is difficult

Karl Eggerss:                      … if you’re making large swings to get “out” and then now you have another decision to make, when to get back in. So you have two decisions you have to be right on.

Justin Pawl:                       That’s right.

Karl Eggerss:                      So to me it’s about modification of a portfolio over time, and it all boils down to when do you need the money?

Justin Pawl:                       Correct.

Karl Eggerss:                      Right? If somebody didn’t need the money for 50 years, I feel pretty good about that. If somebody says, “Hey, I need this money in two years. Should we invest it in stocks?” That’s a totally different conversation.

Justin Pawl:                       Much, much-

Karl Eggerss:                      And the answer’s probably no.

Justin Pawl:                       Probably not. Well, at least not 100% in stocks. And that’s really where portfolio diversification comes into play, where you’re looking at different risk and return drivers in a portfolio. Fixed income investments move a different way than equities for different reasons. Equities and alternative investment strategies move differently from one another. And as the combination of those, that makes for a smoother ride for the client, that keeps them within their risk parameters and keeps them, most importantly, emotionally stable through a period so that they can stay invested to ride out the short-term whips of the marketplace.

Karl Eggerss:                      Yeah, and I would say, I’ll use the analogy, but you’re a California boy, but I’ll use a different analogy.

Justin Pawl:                       Don’t hold that against me. I’m here now.

Karl Eggerss:                      Hey, dude. But here’s the thing, I think, and this is an analogy that I think makes a lot of sense. If you go from San Antonio to Dallas and you take 281 north, you can get to Dallas. If you take I-35 north and you go to Dallas and you split the family up into two and two, a family of four, it’s safer for y’all to take two different paths to get there and you’re going to have different experiences. Traffic, no traffic, accidents, but it is safer to split the family up and do that. Which one’s faster? Which one’s better? I don’t know. You tell me where the wrecks are. You tell me who’s doing construction and I’ll tell you which one’s faster. That’s what portfolio diversification is to me. It is a different path to try to get to the same place and it smooths it out.

Karl Eggerss:                      We’ve spent a lot of time the last few weeks on the podcast talking about people have a very short-term view in terms of looking at recency of the last two or three years and assuming that it’s going to stay that way forever versus people in the ’70s may have had a totally different view and thought it was going to stay that way forever. And how about the Great Depression? That caused probably two generations to not ever invest in stocks again, right?

Justin Pawl:                       That’s right, and it’s not just about a particular asset class. It comes down to diversification by geography, for example. In the ’80s it was all about the Japanese stock market. That stock market could do no wrong, and so people continued to pile money into it. Well, that came to a screeching halt and the Nikkei, the Japanese stock market index, has not reached its old highs in what, 30 years now?

Karl Eggerss:                      30 years.

Justin Pawl:                       35 years. Same thing was repeated with emerging markets. It was repeated with the European stock market and that very well could be the case for the U.S. equity market going forward, where at some point in time there is a pullback in the market and the other geographies take the lead in driving the global indices forward.

Karl Eggerss:                      Yeah, and that’s, again, it’s cliche, but it goes back to diversification. You’re not saying that’s going to happen. You’re saying, “Is it possible?” Yes, because you and I have studied history and most of our listeners have, that have looked and said, “Are we the next Japan? Could it happen?” Absolutely, it could happen. But what’s interesting about diversification is four years ago there was like 60 economists that were surveyed if rates were going to go up. Every one of them said yes and rates went down that year, and it just tells you we don’t know and so that’s why diversification … We think we have better odds because we study it, but the point is that look at the bond market in 2019. How many people were betting against bonds and saying, “I don’t want bonds. I’d rather not diversify because I know that bonds are going to lose money,” when here they are having a fantastic year.

Justin Pawl:                       One of their best. One of their best years.

Karl Eggerss:                      One of the best. We wouldn’t have thought that. So even if you want to underweight something, I think to not go to the extremes and say, “I’m getting out of the stock market,” or, “I’m not going to own any bonds.” To me, just like right now, people not owning international. I see it every day, severely under-allocated to international. Why? Because it has not done well. That’s not a great strategy going forward. So it is little cliche to talk about diversification, but it’s absolutely works over the longterm.

Justin Pawl:                       So diversification is … The reason that you hear so many advisors talking about it, at least the ones that I give credence to in the marketplace, is because we don’t know what’s going to happen next. The world’s a big complex system and anything can happen as we’ve seen repeatedly over time. And oftentimes it happens without any sort of preconditions that are immediately evident to anybody. To the economists, to the financial marketers, to the financial media. And so, that’s why it’s important to basically, if you already have a substantial wealth or even enough wealth where you think you can retire within several years, to diversify those assets to reduce the probability of some individual outcome taking you out and taking out your portfolio so that it forces you to have to go back to work.

Karl Eggerss:                      No, that’s right. I mean, I like analogies and this is … You’re driving down the road. Some people are driving down the road right now, they’re not having to use brakes, they’re not having to use a steering wheel and everything’s straight. At some point a car’s going to come in front of you. You’re going to have to use the brakes and steering wheel. And we see that through a lack of diversification because whatever they’re heavily weighted in, it could be stocks, bonds, commodities, could’ve been oil back in 2013-

Justin Pawl:                       Could have been Bitcoin for a while.

Karl Eggerss:                      Could have been Bitcoin for a while. At some point it doesn’t continue that way and you have to diversify. And again, I think what we try to do is match the goals with what people are trying to accomplish, but also there are several tools in the tool belt we have access to and a lot of people do. They’re just not utilized a lot for whatever reason. And I think it’s kind of been shortsighted in terms of looking what’s recently happened to them or the markets.

Justin Pawl:                       You’re right, Karl, about the different tools in your belt and one of the things that we’re always evaluating in the marketplace is what are the new investment options that are available to people out there? It’s important to be aware of these because as time goes on, technology advances and there’s new opportunities in the marketplace. And I mentioned alternative investments in passing earlier in our conversation, that’s a topic unto itself that I’ll come back to talk with you about later on.

Karl Eggerss:                      Yeah, that sounds good. And you can see, I mean, there are many different biases, mistakes. Again, most of these are psychological. I want to have you back because we really covered one, which is loss aversion, but you can see what happens is we talk about something like this and it’s a full conversation because there are several examples and people need to understand, again, what does loss aversion mean? It’s not just about, “Yeah, I don’t like to lose money.” Nobody does, but what are the real impacts of that, especially when you put it into some statistical numbers like you did with the coin toss analogy. So, Justin Pawl, thank you for joining us. Again, Justin is chief investment officer at Covenant and we will have him back to talk about more of these investment biases and so forth in the weeks ahead. Justin, thanks for coming in. Appreciate it.

Justin Pawl:                       Thank you, Karl.

Karl Eggerss:                      All right, that will wrap it up for today’s show. But before we go, I did want to let you guys know that starting Monday, we’re excited to unveil Covenant You. Covenant You is meant to bring you all of Covenant’s ideas, blogs, videos, podcasts, anything that we have written about, our insights during the week. We’re going to start sending one communication once per week, Monday afternoons, and it’s going to include everything. So it’s very simple as opposed to sending you something as it’s produced and sending you something maybe multiple times during the week, it will be sent on Monday afternoons.

Karl Eggerss:                      Now, here’s what this means for the podcast. For the podcast, if you want to continue getting the podcast as soon as it comes out on Saturdays, which is when we send them out, on Saturday mornings, then you can do it a couple of ways. Number one, they will still go out on social media through the Covenant Facebook page or the Covenant LinkedIn page on Twitter. So you will still get it that way. Or you can also get it through various podcasting services. So you have Apple podcast, Spotify, Stitcher, Overcast, and all the others. Those will be released on Saturday mornings. But in terms of getting an email, which some of you listen to the podcast with an email notification from us, that won’t come until Monday afternoon, so just take that into consideration. Same information, just we wanted to simplify things for you and that way you will have a choice of things that you want to read, watch, listen to, lots of different formats and information coming from collectively Covenant.

Karl Eggerss:                      Obviously my podcast, we’re going to have our chief investment officer’s blog in there included every Monday afternoon as well. So really excited about Covenant You and bringing that to you guys on Monday afternoons. Nothing you have to do different than you’re currently doing, but I did want to make that distinction between when the podcast will be available. Again, Saturday mornings continuously, just available on social media and through podcasting services, but the emails will come on Monday afternoon. So just wanted to clarify that.

Karl Eggerss:                      All right, everybody, thanks for joining me here on the Creating Richer Lives podcast. Don’t forget if you need our help, (210) 526-0057 or visit Have a great weekend, everybody.

Speaker 1:                          Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment, investment strategy or product, including the investments and/or investment strategies recommended or undertaken by Covenant Multifamily Offices LLC, Covenant, or any non-investment related content will be profitable, equal any corresponding indicated historical performance levels, be suitable for your portfolio or individual situation, or proved successful. Moreover, you should not assume that any discussion or information serves as the receipt of or as a substitute for personalized investment advice from Covenant. To the extent that a listener has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with a professional advisor of his/her choosing. Covenant is neither a law firm nor certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of our current written disclosure brochure discussing our advisory services and fees is available upon request or at