Many Happy Returns

Are Investors Rational? Lessons From the Late Daniel Kahneman

Apr 3, 2024

Daniel Kahneman, pioneer of behavioural economics, discusses how cognitive biases skew our decisions and influence investing. Topics include improving investing judgement, managing risk intelligently, and the worth of stock analysts' price targets. The episode explores market predictability, herd behavior, and analysts' forecasting biases in the market.

41:14

Creator website

Episode guests

Daniel Kahneman

AI Summary

AI Chapters

Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Understanding cognitive biases is crucial for smart investing decisions.

Applying Kahneman's prospect theory can help mitigate losses and improve investment choices.

Deep dives

Kahneman's Influence on Behavioral Economics and Investing

Daniel Kahneman, a pioneering psychologist in behavioral economics, passed away at 90, leaving a monumental impact on investing. His work highlighted how psychological biases skew decisions, emphasizing the significance of understanding human behavior in investing decisions. Kahneman's theories, particularly prospect theory, illustrate the concept of loss aversion, where the fear of losses outweighs the joy of gains, impacting decision-making. By applying psychological theories to investing, Kahneman identified potential pitfalls and offered insights on addressing these issues.

Introduction

2min

Understanding Loss Aversion and Risk Perception in Investing

6min

Limitations of Human Cognitive Abilities in Decision-Making

7min

Navigating Emotional Responses and Biases in Investing

3min

Challenging Beliefs and Investing Pitfalls

17min

Insights on Market Predictability and Herd Behavior in Investing

2min

Insights on Index Inclusion and Single Stock Analysts

2min

Analysts' Forecasting and Cognitive Biases in the Market

2min

Daniel Kahneman was the pioneer of behavioural economics and won a Nobel Prize for his work on cognitive biases. By explaining how a litany of psychological missteps skew our decisions, few people have had more influence on investing. We discuss how Kahneman improved our investing judgement and taught us to manage risk intelligently. And in today’s Dumb Question of the Week: Are stock analysts’ price targets worth anything?

Thanks to Freetrade for sponsoring this episode.

Get a free share worth between £100 and £2,100 when you open & top up, or transfer an ISA and/or SIPP. Head over to: Freetrade.io/transfer. New and existing customers. Min £10k transfer or top up. Annual subscription required.

Capital at risk. ISA and SIPP eligibility, tax rules and T&Cs apply. Free share value varies on the amount topped up or transferred. The value of your investments can go down as well as up and you may get back less than you invest. Tax treatment depends on personal circumstances and current rules may change.

At present, Freetrade only supports Uncrystallised Fund Pension Lump Sums (UFPLS) for customers who wish to withdraw funds from their SIPP after their 55th birthday. We strongly encourage you to seek financial advice before making any withdrawals from your SIPP.

---

Get in touch

📧 mhr@pensioncraft.com

🎧 many-happy-returns.captivate.fm

---

Join PensionCraft

🌐 Become a member at pensioncraft.com

▶️ Subscribe on YouTube

---

Disclaimer

This podcast is for informational and entertainment purposes and is not financial advice. We do not provide recommendations or endorse any decision to buy, sell or hold any security. We cannot be held responsible for any actions listeners may take and investors are encouraged to seek independent financial advice.

Get the Snipd
podcast app

Unlock the knowledge in podcasts with the podcast player of the future.

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode

Save any
moment

Hear something you like? Tap your headphones to save it with AI-generated key takeaways

Share
& Export

Send highlights to Twitter, WhatsApp or export them to Notion, Readwise & more

AI-powered
podcast player

Listen to all your favourite podcasts with AI-powered features

Discover
highlights

Listen to the best highlights from the podcasts you love and dive into the full episode

Many Happy Returns

Are Investors Rational? Lessons From the Late Daniel Kahneman

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Kahneman's Influence on Behavioral Economics and Investing

The Impact of Prospect Theory and Loss Aversion on Decision-Making

System One and System Two Decision-Making

Addressing Overconfidence and Cognitive Biases in Investing

Get the Snipd
podcast app

AI-powered
podcast player

Discover
highlights

Save any
moment

Share
& Export

AI-powered
podcast player

Discover
highlights

Many Happy Returns

Are Investors Rational? Lessons From the Late Daniel Kahneman

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Kahneman's Influence on Behavioral Economics and Investing

The Impact of Prospect Theory and Loss Aversion on Decision-Making

System One and System Two Decision-Making

Addressing Overconfidence and Cognitive Biases in Investing

Get the Snipdpodcast app

AI-poweredpodcast player

Discoverhighlights

Save anymoment

Share& Export

AI-poweredpodcast player

Discoverhighlights

Get the Snipd
podcast app

AI-powered
podcast player

Discover
highlights

Save any
moment

Share
& Export

AI-powered
podcast player

Discover
highlights