This transcript has been automatically generated and may not be 100% accurate.

I ... successful investing is not just about what you do write what you don't do wrong ... and Jack Otter Editor Barron's dot com ... I'm yours John Rogers is the founder and chief investment officer Ariel Investments in the only guy I've ever met to be Michael Jordan one-on-one in basketball ... but Speaker John ... Reid to be here ... ah so you talk a bit about some behavioral commonly economics problems mistakes people make ... a let's talk about one which is recency bind so common ... whether it's in the bad times like two thousand ate the good times like two thousandsix here explain this this is the ... most part of the psychology of investing your Chicago the worst of Chicago has several ... economics professors who are experts in behavioral Finance ... and The of this really something that we look at ... how fast is like Toby Moskowitz ... Dick Taylor ... they've really made a ... trip to ... contradict all ... in this area ... so the recency Effect is really when you get to consume what happened ... today ... we'll steal the headlines ... you'll see it on CNBC with Kramer real ... cool seeing people screaming about whatever the current noise happens to be ... some of our favor example today we own a lot of stocks leading the industry ... the slot machine manufacturers ... and the last couple of quarters one of the competitors International Game Technology and earnings disappointments ... all the sudden people started thinking that ... the last two with a competitor to making all the difference ... and even the competitors like the like technology got crushed ... come of all this recent North Tce ... so our job was working on ... the ... recent noise and go out look out over the horizon ... in the sweeping we find real opportunity to have doubled in the long term ... is people tend to whatever has just happened will persist in the future we would quite often of course it doesn't win when times have been good for a long time that a good chance we might have a downturn on the rise in ... any other way round with everything goes to pot ... it's a good time to invest ... another good example of that is we don't ... talk in the ... cruise line ... industry ... conversely will preview ... and Carl will cruise and in all the last couple years ago the couple major crisis is ... where people had died in accidents severe accidents on the shelves in one Bordia ranking exactly who the wreckage was on all the news ... got so much press ... the pictures will or will ... it a reality ... cruise lines very rarely ... ever crash ... much less the airplanes no much less than cars ... and so this was a short term phenomenon stocks drop ... which provided a great opportunity to buy these wonderful plans ... at bargain prices could eventually get back to normal ... mercifully the crashing every day ... and things of the fire ... bell so one wants to avoid those things that are so high because again the recency Effect tells us well it's gone up this guy keep on going up ... attorney sectors that you're ... avoiding is there over here right now ... for some of the areas that you know we all know that happened to me the of the new social media ... has got to be so popular ... so exciting ... and the multiples of just gotten crazy ... all three games ... Candy Crush and all these types of things were ... no people think that these fertile games will be important for the long run ... the another one of them knew that through the virtual currency ... that the coins ... and a lot of all to labor for a while people saw them going open up and bought this isn't the way to get rich and ... to make people jump on the bandwagon ... so we come to think that we can have to do with the sort of ... new work for all ... the new social media world a lot of those stocks that this country way way overpriced ... and you haven't understood the kind of competitive threats ... will come in and other because profit margins ... anything else in your portfolio may be a recent purchase or some may think that is undervalued for the wrong reasons and then it might be gone ... I think that the ... but I think the alternative investment space ... people have bought that ... and the world of the company serves Target to fuel the market for a little bit so shaky ... during the first quarter Lilly second-quarter ... two countries like KKR ... and Blackstone ... haven't fully participated in this bull market recently ... and so we think that's with lyrics and we know will opportunities ... bubbles are great friends we think about a week um to private equity ... more and more institutions are putting money into alternative investments ... you want to work with the big well-known brands like Blackstone and KKR ... sleeping pills doctor really well positioned when people who don't understand long-term trained ... shrink the balance sheet ... sprinkled brands ... well eventually if you have a lot of the lights come on ... thanks much to thank you ... the ...