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RWH037: Celebrating Charlie Munger w/ Mohnish Pabrai, Tom Gayner, Joel Greenblatt, & Chris Davis
We Study Billionaires - The Investor’s Podcast Network
Investment Lessons on Incentives and Self-Delusion
The approach of many on Wall Street involves hyperactivity, owning too many stocks, overcharging, and overpromising. Keeping up with index funds after expenses and taxes is exceedingly difficult. Even with a focused and concentrated fund, it is tough as high conviction in positions can be wrong. Publicly favoring a position can lead to overbelief and excessive commitment. The dangers of wrong incentives and self-delusion are stressed, emphasizing the need for aligned incentives and fair fee structures when investing with others. It's essential to understand the potential for self-delusion and rationalization, and to avoid deluding oneself into thinking they are adding value when they are not.
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