Lessons from Danny Kahneman | Investing in Practice Rather Than Theory
Two Quants and a Financial PlannerApril 01, 202400:54:15

Lessons from Danny Kahneman | Investing in Practice Rather Than Theory

When we start in the investing world, many of us think building the perfect investment strategy is about data and numbers and theory. We think the strategy that works best on paper will also work best in the real world. But it doesn't work that way. And the main reason is that all of us are not what economic theory would call "rational actors". All three of us owe a huge debt to Danny Kahneman for his groundbreaking research that taught us that. Danny recently passed away and as a tribute to him and his work, we wanted to do an episode where we discuss the lessons we learned from him. We discuss system one and system two thinking, prospect theory, anchoring, the availability heuristic, the dangers of overconfidence and how we put all of it to use in the real-world building investment strategies and managing client portfolios.

00:00 - Intro - A tribute to Kahneman
02:48 - We aren't rational actors
05:07 - System one and system two thinking
17:38 - Prospect theory
23:58 - Anchoring
27:30 - The availability heuristic
33:22 - Overconfidence
39:49 - The sunk cost fallacy
45:28 - The illusion of understanding and hindsight bias

#behavioraleconomics #danielkahneman

SEE LATEST EPISODES
⁠⁠⁠https://excessreturnspod.com

FIND OUT MORE ABOUT SUNPOINTE INVESTMENTS
⁠⁠⁠https://sunpointeinvestments.com/⁠⁠⁠

FIND OUT MORE ABOUT VALIDEA CAPITAL
⁠⁠⁠https://www.valideacapital.com⁠⁠⁠

FOLLOW MATT
Twitter: ⁠⁠⁠https://twitter.com/cultishcreative⁠⁠⁠
LinkedIn: ⁠⁠⁠https://www.linkedin.com/in/matt-zeigler-a58a0a60/

FOLLOW JACK
Twitter: ⁠⁠⁠https://twitter.com/practicalquant⁠⁠⁠
LinkedIn: ⁠⁠⁠https://www.linkedin.com/in/jack-forehand-8015094⁠⁠⁠

FOLLOW JUSTIN
Twitter: ⁠⁠⁠https://twitter.com/jjcarbonneau⁠⁠⁠
LinkedIn: ⁠⁠⁠https://www.linkedin.com/in/jcarbonneau⁠⁠⁠
Related Videos
Practical Lessons from Cliff Asness
Two Quants and a Financial PlannerJanuary 20, 202500:58:09

Practical Lessons from Cliff Asness

In this episode, Jack Forehand and Matt Zeigler discuss their fascinating interview with AQR founder Cliff Asness. They explore several key topics from their conversation, including: Cliff's humorous ...

Practical Lessons from Warren Buffett
Two Quants and a Financial PlannerJanuary 13, 202500:54:29

Practical Lessons from Warren Buffett

In this episode of "Two Quants and a Financial Planner," we break down some of Warren Buffett's most important investing lessons and life wisdom through a series of interview clips and annual meeting ...

Practical Lessons from Larry Swedroe | Why Evidence Beats Market Narratives
Two Quants and a Financial PlannerJanuary 06, 202501:02:42

Practical Lessons from Larry Swedroe | Why Evidence Beats Market Narratives

In this episode of "Two Quants and a Financial Planner," we explore key insights from our previous conversations with Larry Swedroe, one of investing's most evidence-based thinkers. Through a series o...