Understanding how the mind can help or hinder investment success is a cornerstone of fund management and helps me in everyday life too.
One of my idols, Daniel Kahneman, said the aim should be to make it part of everyday chats, so we've recorded an episode for our podcast where we try to do just that.
Until robots rule the world, decision-making will be affected by the biases that come from human thinking. That's why we take them so seriously in designing how we work together and our decision-making process.
Understanding and battling biases can lead to better choices in both investments and everyday life, but with such a vast subject it can be hard for people to know where to start. We've targeted improvements in three specific areas, as outlined below.
Within each of those areas we then identified behavioural biases that could damage outcomes, and altered our approach to mitigate them. While our focus is on investment outcomes, I find the same concepts help me too in my personal decision-making.
One of my idols in behavioural finance, Daniel Kahneman, said that he wanted discussion on behavioural biases to become part of “water cooler” chats; not to be a niche topic for overly enthusiastic academics but to be accessible and helpful for everyone.
So to bring it all to life in the way he suggested, we’ve produced a podcast episode that covers a wide range of questions: How can hierarchies be harmful? Why do people generally feel they do more than their share of the household chores? How can we try to make money for investors from others' behavioural mistakes?
Within the team, we’re doing our best to make these topics part of our regular discussions and a natural part of our decision-making. We think we’re seeing the benefit of that, but there’s no perfect solution and it’s important we continue to question ourselves and looking for ways to improve.
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