TIP641: Improve Decision Making with Mental Models w/ Clay Finck & Kyle Grieve

We Study Billionaires - The Investor’s Podcast Network

Stig Brodersen

Education, Investing, Business

4.6 • 3.6K Ratings

🗓️ 30 June 2024

⏱️ 80 minutes

🔗️ Recording | iTunes | RSS

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Summary

On today’s episode, Kyle Grieve and Clay Finck continue their conversation on Investing: The Last Liberal Art by Robert Hagstrom. We discuss details on why using the right explanation for a business is so important to a good investment thesis, simple ways to improve your reading to get more out of the books and content that you consume, how to use simple mathematical concepts to improve your decision making in real-time, how to understand better System I and System II thinking and how it directly applies to investing, some of the latest mental models Kyle has learned from interviewing recent guests, and a whole lot more! IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 03:34 - How to use the proper explanations in your analysis to determine the right comparable best. 06:18 - Why Tesla is so misunderstood. 10:33 - Why the economics of Dino Polska make it an invalid comparison to other grocers. 12:02 - The power of narratives in investing and how we can guard ourselves from getting overly optimistic. 17:43 - How to optimize reading for learning. 40:18 - How to use Bayes theorem to tip odds in your favour and change your position sizing. 45:45 - Why value and prices become disconnected, and how human psychology plays into this. 50:20 - Why intuition (system I thinking) is so difficult to rely on in the stock market. 01:09:22 - How to make thinking in mental models a habit. 01:14:59 - Some of the latest mental models Kyle has learned from interviewing some of his latest guests. And so much more! 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, Kyle, and the other community members. Buy Investing: The Last Liberal Art here. Buy The Great Mental Models here. Learn more about Mental Models here. Buy Poor Charlie’s Almanck here. Buy More Than You Know here Follow Clay on Twitter and LinkedIn. Follow Kyle on Twitter and LinkedIn Check out all the books mentioned and discussed in our podcast episodes here. Enjoy ad-free episodes when you subscribe to our Premium Feed. NEW TO THE SHOW? Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok. Check out our We Study Billionaires Starter Packs. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: River Toyota Sun Life The Bitcoin Way Meyka Sound Advisory Industrious Range Rover iFlex Stretch Studios Briggs & Riley Public American Express USPS Shopify HELP US OUT! Help us reach new listeners by leaving us a rating and review on Apple Podcasts! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! 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.
0:03.0	Metal models can be used from nearly any discipline to help you think better.
0:07.0	However, many investors get paralyzed by over-analysis when they try to think in terms of mental models.
0:12.0	After all, you have to have a full understanding of them at a surface level, and then you need to learn to layer them on top of each other when trying to solve problems.
0:20.0	It sounds easy, but it's not an intuitive task.
0:23.0	Today, Clay and I will continue our conversation on Robert Hagstrom's book, Investing, The Last Liberal Art.
0:29.0	We'll explore philosophical mental models such as why it's so important to use the right description
0:33.6	when analyzing a business. We'll have a look at the early days of Amazon and how a
0:37.3	very prominent investor thought about the Amazon business differently and
0:40.9	succeeded in his process.
0:43.0	We'll examine the world of literature for ways to supercharge your lessons from reading books.
0:48.0	We'll also discuss the importance of narratives in investing in how you can use them to your advantage
0:52.0	while also avoiding potentially risky investments. in investing in how you can use them to your advantage
0:52.5	while also avoiding potentially risky investments.
0:55.7	Turning to the world of mathematics,
0:57.3	we'll look at Bayes Theorem.
0:58.8	This is a mathematical concept
1:00.6	that you may have never thought about,
1:02.0	but probably calculate regularly on an unconscious level.
1:05.0	Understanding at a conscious level will help you make better, higher quality decisions regarding your investing,
1:11.0	especially as it relates to valuation.
1:13.9	Then we'll look at some of the great concepts in the world of decision-making.
	...

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