Money and Finance
Link to video and conversation text: This Thing For Which We Have No Name
- The Wsj Interview With Robert Shiller
Link to interview: Robert Shiller's Nobel KnowledgeQ: One theme that runs through your work is that people tend to make mistakes over and over again. That's quite different than what I learned in college economics—that people are rational. How...
- Excerpt From The Most Important Thing Illuminated - By Howard Marks
Contrarianism By Howard Marks, Author of The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor Accepting the broad concept of contrarianism is one thing; putting it into practice is another. On one hand, we never know how...
- Warren Buffett Quote On Filters
As I've previously mentioned (HERE) how important I think filters are in deliberate practice and achieving expertise in investing, this quote from Warren Buffett during yesterday's Berkshire Hathaway Annual Meeting really struck a chord with me:"Charlie...
- Nassim Taleb On Learning From History
These quotes reminded me of the importance of using checklists in certain areas of life, including the investing process:"As I mentioned above, it is not natural for us to learn from history. We have enough clues to believe that our human endowment does...
- The Behavioral Revolution - By David Brooks
Roughly speaking, there are four steps to every decision. First, you perceive a situation. Then you think of possible courses of action. Then you calculate which course is in your best interest. Then you take the action.- Over the past few centuries,...
Money and Finance
Edge Conversation with Rory Sutherland: This Thing For Which We Have No Name
Link to video and conversation text: This Thing For Which We Have No Name
"No one ever got fired for buying IBM" is a wonderful example of understanding loss aversion or "defensive decision making". The advertising and marketing industry kind of acted as if it knew this stuff—but where we were disgracefully bad is that no one really attempted to sit down and codify it. When I discovered Nudge by Richard Thaler and Cass Sunstein, and the whole other corpus on Behavioral Economics…. when I started discovering there was a whole field of literature about "this thing for which we have no name" …. these powerful forces which no one properly understood—that was incredibly exciting. And the effect of these changes can be an order of magnitude. This is the important thing. Really small interventions can have huge effects. ...
..................Markets actually work because they're adaptive. Bad things get killed, good new things sometimes get promoted. But most of the time what you'll find in business is no one has the faintest idea of why the things that work actually work. What's very useful here is that finally a group of academics with money, time, and immensely high intelligence were finally sitting down to codify and make sense of things, which we'd been aware of for years but which, to our shame, we'd never attempted to actually try and systematize.
There are some great books mentioned in the interview, such as Thinking, Fast and Slow (only $2.99 on Kindle) and Timothy Wilson's book, Strangers to Ourselves, which Nassim Taleb reviewed on Amazon in 2003, in which he wrote:
The book that carried the most influence on my thinking this year (I went back to it half a dozen times).
This is a clearly written presentation of our inability to forecast our own behavior and to predict our emotional reactions to positive and negative events. One would think that the repetition of experiences with consistent forecasting biases would lead to some correction but this is not the case.
We are more resilient than we think ("immune neglect"). The book also discusses the reversion to baseline happiness after what we thought would bring a permanent improvement in our moods (yet we never learn from it).
The most important part covers the "hindsight bias" how we see past misfortunes as deterministic --and how we can confront negative emotions by making them even more so (by creating a narrative that make the events appear unavoidable).
- The Wsj Interview With Robert Shiller
Link to interview: Robert Shiller's Nobel KnowledgeQ: One theme that runs through your work is that people tend to make mistakes over and over again. That's quite different than what I learned in college economics—that people are rational. How...
- Excerpt From The Most Important Thing Illuminated - By Howard Marks
Contrarianism By Howard Marks, Author of The Most Important Thing Illuminated: Uncommon Sense for the Thoughtful Investor Accepting the broad concept of contrarianism is one thing; putting it into practice is another. On one hand, we never know how...
- Warren Buffett Quote On Filters
As I've previously mentioned (HERE) how important I think filters are in deliberate practice and achieving expertise in investing, this quote from Warren Buffett during yesterday's Berkshire Hathaway Annual Meeting really struck a chord with me:"Charlie...
- Nassim Taleb On Learning From History
These quotes reminded me of the importance of using checklists in certain areas of life, including the investing process:"As I mentioned above, it is not natural for us to learn from history. We have enough clues to believe that our human endowment does...
- The Behavioral Revolution - By David Brooks
Roughly speaking, there are four steps to every decision. First, you perceive a situation. Then you think of possible courses of action. Then you calculate which course is in your best interest. Then you take the action.- Over the past few centuries,...