BO70: Four C’s of Good Investing: Consistency

Top Traders Unplugged

Niels Kaastrup-Larsen

Business, Business News, Investing, News

4.8 • 670 Ratings

🗓️ 4 May 2020

⏱️ 4 minutes

🔗️ Recording | iTunes | RSS

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Summary

How a few simple rules were 97% more accurate than predictions from a variety of experts, in fields like stock picking.

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Transcript

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0:00.0	I want to talk because you very neatly put it into something you call the four Cs.
0:07.0	Although my wife told me when we got married that the four Cs has completely different meaning,
0:11.0	so now I'm confused here.
0:13.0	This is color, color cut clarity and what's the other one?
0:16.0	Carrot.
0:17.0	Yeah.
0:18.0	Carrot. Yeah. That seems to be front and center as well. So your four Cs are a little bit different.
0:25.3	Although, you know, so consistency, clarity, courageousness, and conviction.
0:31.6	So I'd love to spend a little bit of time on each of those because I think this is where we can hopefully, you know, help our listeners
0:38.9	today because as you say, I mean, we're prone to these biases, but there are ways to
0:43.7	handle them better than what we would normally do. So, so why don't we just, you know, jump in
0:50.0	and start with consistency and, you know, what you think about when you, when you use when you use that as a way to overcome?
0:57.0	Sure.
0:58.0	So consistency is again around automation and being a rules-based or systematic investor.
1:04.8	So the best example I can cite here is a meta-analysis of,
1:10.9	so which is a meta-analysis being a study of all of the studies.
1:14.9	So this meta-analysis of following simple rules
1:18.9	versus relying on PhD-level human discretion.
1:23.5	So do you just follow the rules,
1:25.9	or do you get a group of experts to make a decision?
1:28.7	They looked at over 200 studies and they found that 94% of the time, simple rules met or exceeded the level of decision making by a group of experts.
1:43.4	And this has nothing to do with cost or headache or time spent.
	...

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