TIP623: The Art Of Decision Making w/ Annie Duke
We Study Billionaires - The Investor’s Podcast Network
Mastering Probabilistic Decision Making
This chapter delves into the significance of probabilistic thinking in decision-making, especially within investing contexts. It stresses the importance of understanding expected value and base rates, using examples like poker and restaurant ventures to illustrate how historical data can better inform risk management and success probabilities.
Kyle Grieve chats with Annie Duke about her own story of quitting and how it helped sparked the idea for one of her books, the importance of base rates in helping us make better decisions, how to improve our investing processes when we have long feedback loops, the importance of using kill criteria to quit an investment or hypothesis, how to use a quitting coach to help you quit things we hold onto for too long, the importance of dissociating ourselves from our most cherished ideas, and a whole lot more!
IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro
02:28 - Annie's own story of quitting and how it got here to where she is today.
15:50 - Why expected value is so crucial for investors to manage risk best.
20:15 - The importance of understanding base rates.
20:15 - How we can use base rates to help us best understand expected values of our investments.
24:55 - How we can reframe our analysis of a business to close feedback loops on long-term investments.
32:40 - How we can get transfer from one skill to another far away skill (e.g. chess to investing).
45:28 - How we can use kill criteria in our investing decision-making to improve our abilities to quit a losing investment.
45:28 - How to engineer your decision-making to give yourself an outside view.
51:11 - How we can disassociate ourselves from our investments to reduce the impacts of the endowment effects.
51:32 - How to set up a quitting coach by permitting them to disagree with you.
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 Quit: The Power of Knowing When to Walk Away here.
- Buy Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts here.
- Check out Annie’s substack here.
- Learn more about Annie Duke here.
- Related Episode: RWH015: Betting Better In Markets & Life w/ Annie Duke | YouTube video.
- Related Episode: TIP231: The Mind Of A World Poker Champion w/ Annie Duke | YouTube video.
- Learn more about the Berkshire Summit by clicking here or emailing Clay at clay@theinvestorspodcast.com.
- Follow Kyle on Twitter and LinkedIn.
- Check out all the books mentioned and discussed in our podcast episodes here.
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