I put 80% of my money in the S&P

**SPEAKER_1** (0:00)
All right, Shaan, I have a study that's gonna show why the amount of money that you make is almost entirely out of your control unless you do what I tell you to do. How's that for an opener?

**SPEAKER_2** (0:12)
I feel like it is like a late night infomercial that just like is about to brainwash me into something. I'm intrigued, go on, what do you mean? What do you mean it's out of my control? Nothing's out of my control.

**SPEAKER_1** (0:29)
It's about as out of control as it is your ability to control if you're seven foot tall or not. So I got to give a shout out to Jim O'Shaughnessy. I saw a clip where he brought me to this topic. He talked about the study that I'm going to reference. So in 2014, there was a researcher in Sweden named Heinrich. Interesting things about the Swedes is that they are obsessed with two things, twins and money.
So Sweden has this massive twin database where they have many, many hundreds of thousands, hundreds of millions of twins that they've documented. And for some reason, they track twins. I think originally they did it for health reasons where they wanted to track what type of twins got diseases and illness.

**SPEAKER_2** (1:09)
Twins are great for studies, right? Because nature is controlled, so it's all about nurture. Yes.

**SPEAKER_1** (1:13)
And so they have this massive database. And they were able to break the database down into fraternal twins, which are twins that are born at the same time but don't look alike, and identical twins. They're also obsessed with money. They love money. And in particular, the government loves money. Up until 2007, they had a wealth tax. And as part of the wealth tax, Sweden basically tracked every citizen's entire financial portfolios. They looked at which stocks you owned, the mutual funds that you owned, every dollar of savings. They basically tracked all of this stuff. And so what was interesting is that this guy named Heinrich, he had this premise, this idea where he was like, how much of investing in savings behavior is controlled by genetics? And so he looked at the differences between fraternal twins and identical twins, because presumably twins grew up in the same environment. In many cases, they have the same education levels.
Their parents spoke to them the same way. They were loved to similar amounts, whatever.
And then he looked at, well, how do the fraternal twins, who only share 50% of genetics, how do they invest and save compared to the identical twins, who have share 100% of DNA? And he broke it up into six biases. So people who held too few stocks, excess turnover, people who traded a lot, performance chasing, so people who bought whatever that did well the year before, over investing in your home country called home bias, loving lottery type stocks, and then the disposition effect, which is refusing to sell losers. And he looked at all of this data, and I think he looked at it over the course of 30,000 such as twins. Additionally, he looked at outliers. So for example, twins that were separated at birth and a couple of stuff like that. And the results that he found was basically and concluded was that 45 percent of savings and investing patterns and behaviors was genetic, which I find to be astounding. And the reason I was thinking about this was you and I, I would not, I think we both in different ways like investing, but we are not, I would say, professional investors.

**SPEAKER_2** (3:23)
My portfolio would also say I'm not a professional investor.

**SPEAKER_1** (3:27)
And yeah, we love having professional investors on the podcast. We both love reading about Warren Buffett and people like that. And I was trying to figure out two things. The first is why do I like that so much? What am I drawn to these guys for so much? And the second thing was a couple of podcasts ago, we talked about passion and how to figure out what you're kind of supposed to be doing. And I was trying to look for a more scientific reason about why I should do what I do. To address the first one, why do we like these investors so much? Well, I think I realized that in order to be a world class investor, finances are actually secondary to human nature.
Financial trends change every decade, every handful of decades. Something will, some new thing will pop up, you know, SPACs are this new thing. So like learning about that is important, but that changes every so often. But what doesn't change is thousands and thousands of years of human nature. And understanding how humans behave and asking yourself, why do they do what they do, is significantly more important than the financial stuff.