Navigating Uncertainty in Investing | 16min snip from We Study Billionaires

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TIP554: Mental Models for Successful Investing w/ John Jennings

We Study Billionaires - The Investor’s Podcast Network

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CHAPTER

Navigating Uncertainty in Investing

This chapter examines the deep-rooted human discomfort with uncertainty and its significant impact on investing behaviors. It highlights the evolutionary advantages gained from pattern recognition and discusses how stress and anxiety arise from unpredictability. Through case studies and mental models, the chapter emphasizes strategies for improving decision-making and managing emotional responses in the face of market volatility.

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On today’s episode, Clay chats with John Jennings about his new book - The Uncertainty Solution.

John Jennings is President and Chief Strategist of St. Louis Trust & Family Office, which has $12 billion dollars in assets under management. He is also a member of the firm’s Management Committee, on its Board of Directors, and also serves on the Investment, Risk Management, and Trust Committees. John works closely with client families, advising them in all areas of wealth management.

IN THIS EPISODE YOU’LL LEARN:

00:00 - Intro.

01:38 - Why humans are hard-wired to avoid uncertainty.

06:40 - Mental models we can use to invest more intelligently.

10:08 - How humans tend to react when faced with uncertainty.

16:56 - Why we are wired to quickly come to conclusions and tend to confuse correlation with causation.

27:17 - How the improbable is much more probable than we might expect.

32:13 - Why the economy is not directly correlated with the stock market.

47:51 - Where investing falls on Michael Maubbousin’s Skill vs Luck continuum.

1:00:53 - How behavior biases like loss aversion and overconfidence affect our investment decisions.

1:06:14 - How storytelling can trick us into making poor investment decisions.

1:10:13 - What base rates are and understanding base rates can help us make more intelligent decisions.

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.
John’s new book - The Uncertainty Solution.
John’s website.
John’s firm - St. Louis Trust & Family Office.
Check out our newly released TIP Mastermind Community.
Check out our recent episode covering the 2023 Berkshire Hathaway Shareholder Meeting or watch the video.
Follow Clay on Twitter.

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