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Thinking, Fast and Slow - Daniel Kahneman


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[amazonsearch]Thinking, Fast and Slow[/amazonsearch]

 

http://www.nytimes.com/2011/10/21/opinion/brooks-who-you-are.html?_r=1

 

Coming out soon. His research into cognitive biases and heuristics is very helpful to any value investor who tries to have an edge by being more rational than the market. I also recommend:

 

[amazonsearch]Judgment Under Uncertainty:  Heuristics and Biases[/amazonsearch]

 

[amazonsearch]Heuristics Biases:  The Psychology of Intuitive Judgment[/amazonsearch]

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I read the article in the NYT. My takeaway from the article is he thinks any of the great investors that have done very well. All of their success is attributed to luck. The few paragraphs that talks about overconfidence was great.

 

I'm not sure I understand. Where does the NYT article talks about investing and luck?

 

In any case, the NYT piece is pretty superficial and that writer isn't known for his accuracy about scientific matters. I recommend reading the source material.

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I agree the financial services industry doesn't provide much value. I gleaned from the article that most stock pickers don't do well and the very successful ones performance is all luck.

 

He seems to have studied random wall street traders, so I'm not surprised that he came up with that conclusion. I don't think it's meant to applied to all investors, including value ones.

 

But in any case, what's most interesting about the work of Daniel K. and Amos T. is not their work that is directly about investing. It's more about this kind of stuff:

 

http://en.wikipedia.org/wiki/List_of_cognitive_biases

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  • 2 weeks later...

[amazonsearch]Thinking Fast and Slow[/amazonsearch]

 

I'm am halfway through Daniel Kahneman's new book Thinking Fast and Slow.

 

It is nothing short of brilliant.  You must read this book!

 

(Kahneman, a psychologist, won a Nobel in Economics.  Partially an intellectual memoir, it is brilliant, illuminating (and also has some nice elegiac passages about his late collaborator, Amos Tversky.)  It reads like a conversation with your favorite uncle who happens to be brilliant and who won a Nobel prize by inventing an entirely new field.

 

Here is Michael Lewis's Vanity Fair article on the book:

http://www.vanityfair.com/business/features/2011/12/michael-lewis-201112

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Fascinating article. I have often observed that my favorite people after which to model my own behavior are those with loads of humility coupled with above average results. People with the sense to be humble are often the ones who learn / adapt most readily even when they are highly accomplished.

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This book looks interesting. I have too many damn books on my reading list and not enough time, but I'll add this one to the list.

 

I've had to learn to live with this problem for a while now.

Someone needs to disable my Amazon account until I work my way through my current reading list. It's starting to get ridiculous. But I somehow always get excited and order a new one.

 

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Fascinating article. I have often observed that my favorite people after which to model my own behavior are those with loads of humility coupled with above average results. People with the sense to be humble are often the ones who learn / adapt most readily even when they are highly accomplished.

 

Humility is huge, probably the most underrated quality but one that plays the biggest factor in outcomes.  Often ego or pride will blind people to data or outcomes.

 

I wish humility would get more airtime, of course not many people actually strive for humility...

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  • 5 months later...

I am about half way through this gem of a book by Daniel Kahneman a Nobel Prize winner for economics. I rate it a must read for anyone who wants to understand why most individuals find the discipline of investing so gosh darn frustrating. We are mostly hard wired to make poor choices.

http://www.theglobeandmail.com/news/arts/books/thinking-fast-and-slow-by-daniel-kahneman/article2249529/

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Roger As I said I am only half way through, but the fact that individuals let their type one thinking make so many decisions even the important ones explains , at least partially, why the value discipline can produce superior returns.

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