Episodes
Short sales are rarely the simple inverse of a long sale-LEARN 3 strategies for investing success in short sales. A monkey cannot out perform an investment professional-the monkey doesn't know about the 10% of stocks that out performs every-time. Are emotion and reasoning connected? Also, learn what became of Einstein's brain after he died, did he use 100% of his brain? Not likely, since using 100% of our brains would likely result in seizures and hallucinations as your motor and visual...
Published 06/25/19
Investors should be aware that stocks are not always normally distributed and when this fact is overlooked they may suffer from the 'regression to the mean' bias! What is a regression to the mean? When a stock price is extended either to the upside or downside, then it will usually correct toward its average price. However, there are many exceptions since above or below average performance does not always mean revert because of outlier events beyond a normal distribution. Listen in and learn...
Published 06/18/19
Embrace that we think at multiple levels, not just fast and slow. Our thought process is constructed in 3 levels, due to the complexity of our brains. The first level is instinct, which is our emotional response, the second level is intuition, a learned response or skill, and the third level is reasoning, which is your conscious mind involved in complex thought. Be disciplined in your investment decision making while playing the long game. A loss is felt more keenly than a win, and there...
Published 06/11/19
Illusions of control or illusion of invulnerability bias, is in response to the complications of the world and your brain. We think we have everything worked out and are overly confident which can lead to disaster. For example, when an investor or a manager is on a winning streak for a while they will tend to think that the success is an outcrop of their brilliance and any move they make will be successful and they don't consider their process. The subcortical area of the brain, specifically...
Published 06/04/19
How does your brain interpret the world and develop narratives? It takes a heroic effort to upend a narrative that you put a lot of work behind. Sticking with a narrative without looking at the chain of cause and effect, and or shining a light on the gaps in your knowledge can lead to falling off a financial cliff in investing, as well as life choices.
Published 05/28/19
Strategies for investors, lawyers, intelligence analysts, and everyday life. Gather evidence to strategize if on the correct path - we are looking for confirmation. But, beware of "Idea Inoculation", which can result in not seeing all of the options, because we cherry pick the evidence to support our strategic plan. Don't miss the evidence and be taken down by confirmation bias! Think deeply and frequently about your positions, and self-reflect on the evidence.
Published 05/21/19
The default effect is a strategy used in marketing with great success. It is very human to go with the 'status quo'. There is a natural brain benefit, because all of these little decisions can results in mental/decision fatigue. In investing it maybe necessary to overcome the default by reconstructing the entire portfolio, to reconsider the current stance and possibly make changes. Opting out or making a new decision is fatiguing, but going with the status quo can have a nefarious effect.
Published 05/14/19
How do you avoid decision fatigue? Strategies used by George Baxter, JD, CFA include limiting his decisions outside of his professional life as a hedge fund manager, thereby fighting the chances of becoming fatigued. For example, you can follow others leads in ordering food. Make use of automated strategies and use default rules to make decisions. This will help you to reduce decision fatigue. Humans make multiple decisions in a day, excessive numbers of options can also result in...
Published 05/07/19
Learn specific risks and benefits of working in teams, by maximizing group benefit by avoiding mental model of Groupthink bias. Groups tend toward an optimal level of function where the members understand and appreciate their skill set, but remain open to exploring new ideas and innovating. Newly formed groups may struggle to get their bearings as they explore one another's skills. Mature groups who worked together are often more efficient, but risk becoming polarized and hardened in their...
Published 04/30/19
We take a deep dive into the benefits of thinking in groups and how our mental models change through group interactions. Team members can help us to flesh out our mental models in a variety of situations. Seeking multiple opinions can give you a wider perspective, but other people’s opinions can have an oversized effect on your thinking. Benjamin Graham spoke about the quality of your analysis making a big difference, but also that listening to groups can aid you to be a better investor....
Published 04/23/19
Value runs deeply within your brain. The brain’s reward systems respond to primary incentives, but the story does not end there. People amplify the value of objects and experiences to a dramatic degree through our shared perceptions. Investing is guided by both ground truth value and our extended mental models of the situation. The social narrative can amplify value, as is the case of Warren Buffet’s signed ukulele selling for upwards of $10,000. Human perception drives the value of art,...
Published 04/14/19
Do you want to learn about Mental Model$, behavorial finance and neuroscience/your brain? Do you want to know how your brain functions and the interactions with financial decision making? This show is for you! This show is also the perfect opportunity for listeners to meet the hosts and get to know their style. Mental Model$ Podcast provides listeners with an opportunity to enjoy original, high-quality content. Tune in, subscribe and discover why listeners refuse to miss Mental Models...
Published 04/04/19