TIP571: Charlie Munger & The Psychology of Human Misjudgment

The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network

Stig Brodersen

Business, Education, Investing

4.6 • 3.6K Ratings

🗓️ 18 August 2023

⏱️ 61 minutes

🔗️ Recording | iTunes | RSS

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Summary

Clay Finck reviews the 28 psychology of human misjudgments in Peter Bevelin’s book, Seeking Wisdom. One of the best ways to behave more rationally is to understanding our own shortcomings biologically which we are oftentimes unaware of. This episode dives deep into these shortcomings, and how we can sidestep them to invest more wisely. IN THIS EPISODE YOU’LL LEARN: 0:00 - Intro 4:11 - Many of the human misjudgments that Charlie Munger has spoken about extensively. 4:34 - What bias by mere association is. 8:41 - How rewards and punishments influence our behavior. 14:51- How self-interest and incentives drive decision-making. 24:40 - The bias of self-deception and denial. 26:00 - The bias of being consistent with our prior actions. 30:11 - The status quo bias. 31:42 - How investors can exploit the tendency of humans to be incredibly impatient. 36:58 - The anchoring bias. 43:51 - What reciprocity is, and it’s effects on human behavior. 48:29 - The bias of social proof. 51:01 - How authority bias effects our investment decisions. 51:53 - How to combat our desire minimize uncertainty. 55:07 - Why the simple solution is oftentimes the best solution. Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members. Peter Bevelin’s book: Seeking Wisdom Tune into our previous episode with Gautam Baid or watch the video here. Tune into our previous episode covering Chris Mayer's book, How Do You Know? or watch the video here. Check out our recent episode covering Mark Leonard's Letters and Constellation Software or watch the video here. Follow Clay on Twitter. SPONSORS Support our free podcast by supporting our sponsors: River Toyota Range Rover Briggs & Riley American Express The Bitcoin Way Public Onramp USPS SimpleMining Sound Advisory Shopify AT&T BAM Capital Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Transcript

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0:00.0	You're listening to TIP.
0:03.1	One of the most important things to behaving more rationally is understanding our countless
0:07.5	behavioral biases at play when making decisions.
0:10.7	And that is why in today's episode, I'm going to be sharing the psychology of human misjudgments
0:15.6	that have been explored extensively by legendary investors such as Charlie Munger.
0:20.5	To help guide us through this journey of exploring human psychology, I picked up Peter Bevelin's
0:25.1	wonderful book called Seeking Wisdom.
0:27.8	This book dives into the wisdom of some of the world's greatest thinkers, including
0:31.6	Charlie Munger, Warren Buffett, and Charles Darwin.
0:34.8	In part two of the book, Bevelin dives into 28 misjudgments explained by psychology,
0:40.1	many of which I'll be walking through during this episode.
0:43.0	This episode will touch on the power of incentives, how we as humans are impatient, are desired
0:48.3	to remain consistent with prior actions, the anchoring bias, authority bias, social proof,
0:54.5	or desire to attach meaning to outcomes and determine the causes of why things happen
0:59.2	in much more.
1:00.8	As I read through these great examples in the book, I'm reminded just how often we humans
1:05.4	behave irrational, and we do so without even knowing it as we're very emotionally driven
1:10.4	creatures.
1:11.4	I don't want to give too much away here at the beginning, so with that, I hope you
1:14.4	enjoy today's discussion covering Peter Bevelin's book Seeking Wisdom.
1:18.8	You are listening to the Investors podcast, where we study the financial markets and read
1:27.5	the books that influence self-made billionaires the most.
	...

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