Interview with Barry Ritholz: How Not To Invest

In this Motley Fool Conversation, Barry Ritholz, co-founder, chairman, and CIO of Ritholz Wealth Management, discusses his book "How Not To Invest" with Andy Cross and Jason Moser. Ritholz explains why he chose to focus on mistakes rather than a typical "how-to" approach, emphasizing that avoiding common errors can significantly improve investment outcomes. He uses the metaphor of tennis to illustrate how amateur investors should focus on minimizing unforced errors rather than trying to make complex plays. The conversation covers the importance of passive investing as a core strategy, the challenges of active stock picking, and common mistakes investors make at different stages of their investment cycle, such as under-investing when young or holding overly concentrated portfolios later in life. Ritholz also delves into the behavioral aspects of investing, particularly the Dunning-Kruger effect and how overconfidence can lead to poor decisions. He highlights that selling stocks is often more challenging than buying due to emotional factors and the difficulty of knowing when to cut losses or let winners run.