Episodes
Helpful to have a schema or picture of how the economy works so you don't overreact to news reports such as Chinese tariffs, that might rattle the market. Further discussion of predictors of recession and investing strategies in a turbulent market. Visit Mental Models Podcast for link to video mentioned in the podcast and links to our YouTube channel. As always thank you for listening and please follow, subscribe and like the podcast - it matters!
Published 08/13/19
Is the US headed into a recession or contraction in the economy? Confirmation Bias is when we force our views upon the macro data, and there is always something there. What are indicators of a recession? Humans are excellent data processors for the short term, we need indicators to watch for. It is necessary to identify what is actionable, but macro events in the Economist Magazine for example, can obscure our perspective, due to over coverage. A better strategy would be to step back and...
Published 08/06/19
Understand your mental model, and develop a competitive advantage of investing strategies, and learn the brain science behind the knowledge illusion. Like a 'prosthetic for your brain' extra knowledge can appear to expand your horizons, but beware it maybe an illusion. https://www.mentalmodelspodcast.com "Understanding Behavioral Bia$: A Guide to Improving Financial Decision Making" AVAILABLE...Fall, 2019 Authored by Dr. Daniel Krawczyk & George Baxter, JD, CFA Publisher...
Published 07/30/19
A challenge for investors is get the timing correct in their forecasts. How does the timing of current events impact the market and what is your brains role? This is relevant to the Equifax data breach and the 2008 housing crisis. Some experts were calling out the possibility of an economic crisis linked to subprime mortgage practices, but their timing was early. Predicting the speed at which events will unfold is extremely difficult. One particular speculation is the current day 'loss of...
Published 07/23/19
Learn strategies to fix memory biases that keep you from financial success. Increase your profit margin! Learn the science of memory to truly understand how you are being tripped up by memory bias. Followed by tips from a hedge fund manager who currently uses these strategies in his shop leading to great $$ success. Investors, sales people, business, entrepreneur or solo-E can increase profit margin with these strategies, tips and fixes.
Published 07/16/19
Expertise can serve an investor very well, although it can take 10,000 hours to be a true expert in a particular field. Skills developed in another discipline that has a similar process, can allow an investor to build grit by sticking to a specific discipline, while building a mind set to build towards expertise. Top tip, prioritize sleep because it is restorative and helps with memory and building of expertise. Also, investors will rely on industry 'experts' to understand a particular...
Published 07/09/19
Not being able to see the difference between what you know NOW relative to what you KNEW before IS hindsight bias - a psychological bias that can be overcome in investing. How? Choose stocks based on a sound analysis of company financial performance and for their true market value. Like politicians and weathermen, investors can't predict the future. Investors can focus on their process and recheck their thinking leading to greater profits. Remember that the world is complex and many factors...
Published 07/02/19
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