We Study Billionaires - The Investor’s Podcast Network TIP447: How to Build a Human Bias Defense System w/ Gary Mishuris
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May 13, 2022 Gary Mishuris, managing partner and chief investment officer of Silver Ring Value Partners, dives into the fascinating world of behavioral finance. He unpacks the pitfalls of overconfidence and anchoring, shedding light on how biases like the endowment effect and social proof can skew investment decisions. Mishuris emphasizes the importance of questioning assumptions within investment teams and highlights the dangers of scarcity bias, especially in trendy markets like NFTs. Get ready for key strategies to outsmart cognitive traps in investing!
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Focus on Accuracy and Humility
- Focus on forecasting accuracy, not just high returns.
- Build structural humility into your investment process to avoid overconfidence.
Value Traps vs. Incorrect Analyses
- Jean-Marie Eveillard believes there are no value traps, only incorrect fundamental analyses.
- Mishuris uses a "devil's advocate" exercise to challenge investment theses early on.
Weigh Experience Over Confidence
- Acknowledge base rate neglect, the tendency to ignore the experience of others.
- Weigh the experience of others heavily and your own perceived capabilities lightly.