The Five Behavioral Mistakes Investors Make

Published on
September 12th, 2018
Duration
25 minutes

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21

The Five Behavioral Mistakes Investors Make

The Expert View ·
Featuring Michael Mauboussin

Published on: September 12th, 2018 • Duration: 25 minutes

Michael Mauboussin, director of research at BlueMountain Capital Management, discusses the five most common behavioral mistakes he sees investors make. He explains what scientific research can teach us about investor behavior, and discusses how the types of mistakes made can shift over the course of an economic and market cycle. With this background set, Mauboussin provides tips for plugging one's behavioral leaks. Finally, he explains how one might be able to make better decisions by anticipating the mistakes of others. Filmed on January 25, 2018 in New York.

Comments

  • VB
    Vincent B.
    12 May 2020 @ 21:23
    0 0
    Content like this makes RV so increadible.
  • TT
    Trenton T.
    26 October 2018 @ 02:14
    0 0
    This could be the most thoroughly rational piece I've seen yet on RV. Well done. I've lived in the PE world since 2007 and the process is absolutely applicable.
  • AC
    Andrew C.
    16 September 2018 @ 02:47
    3 3
    That "blow out your headphones" music is back.... Thanks, RVTV. The people in the coffee shop missed me screaming and throwing down my iPad and ripping out my EarPods in a painful outburst - arrgghhh!
    • AE
      Alex E.
      16 September 2018 @ 23:26
      3 0
      But, seriously, there's this little device on your iPad called a "Volume" button that goes an incredibly long way towards mitigating this problem...
    • my
      markettaker y.
      27 September 2018 @ 00:00
      1 0
      alex: yes, there is, but the point is that the music is much louder than the rest of the audio, so it comes on suddenly and is so loud and annoying. Wish milton would fix the damn music.
  • CS
    Christopher S.
    12 September 2018 @ 14:13
    11 1
    I'd say if you take most people, their real issue is being too risk averse than being too gung ho and risk taking. I recently went round asking just about everyone I know: "If I offer you a 10/1 payout on a coin flip, how much over your net worth would you bet?" And very few people replied any kind of acceptable amount, many people even said "Nothing, I don't gamble." I found the whole thing rather depressing, evidence that I need to surround myself with better people. Over the course of a life, a career, you need to actually play a hand. Just make sure you're still standing to play the next one too.
    • MZ
      Martin Z.
      15 September 2018 @ 08:04
      2 0
      Deciding not to gamble is also a gamble. Just as refusing to make a decision is a decision. There is no way not to play. So play with enthusiasm, as impeccably as you can.
    • CM
      C M.
      19 September 2018 @ 14:50
      0 0
      Capital preservation is as important to some as the 10 to 1 odds. That decision is more for a speculator than an investor when the choice has a 50% chance for 100% loss.
  • DS
    David S.
    12 September 2018 @ 21:51
    2 1
    When you combine the MACHINE LEARNING REVOLUTION interview and the FIVE BEHAVIORAL MISTAKES INVESTORS MAKE interview, you see how powerful Dr. Villani’s machines are. I believe it is the combination of machine learning with market acumen that will provide the edge. Just like having a pilot in the plane when it is on autopilot, it is the combination that will work. Very few people will have both of those skill sets. DLS
    • AE
      Alex E.
      16 September 2018 @ 23:24
      0 0
      Except when a soft or hardware glitch happens just after the computer takes over to land the plane and the human pilot has to now land a steeply decelerating aircraft with engines powered down...Yeah, I don't think I want to be on that particular plane...
  • CJ
    Coen J.
    15 September 2018 @ 21:10
    1 0
    This guy gets an A for pedagogy. A most useful piece. Thank you.
  • SB
    Stewart B.
    15 September 2018 @ 08:48
    1 0
    Excellent. A really clear and well structured presentation on behavioural finance.
  • CH
    Colin H.
    13 September 2018 @ 06:19
    2 0
    it might be an idea to put a share button on here somewhere so you can post an excerpt to twitter
  • CH
    Colin H.
    13 September 2018 @ 06:16
    2 0
    Clever shit
  • MS
    Mitchell S.
    12 September 2018 @ 23:45
    12 0
    Phenomenal. Concise, well articulated, insightful.
  • RM
    Robert M.
    12 September 2018 @ 20:35
    4 0
    It's sobering (being a macro gadfly myself) to hear another investing legend in addition to Buffett say macro is generally beyond their abilities. One of the points made in Superforecasting by Tetlock which expands on many of Michael's points is the primary importance of choosing the most predictable problems on which to focus your forecasting energies. Obviously Michael and Warren have decided that starting point should be narrowed down to bets on companies with a 10yr track record of stable and high ROE, entered with a margin of safety, without leverage, as part of a portfolio, held through drawdowns as long as the thesis is intact, and perhaps reweighted when over valued.
  • rr
    rlw r.
    12 September 2018 @ 16:56
    5 0
    Super critical content really well delivered. Kudos Michael & RV.
  • TE
    Tito E.
    12 September 2018 @ 13:35
    4 0
    Decision don
  • SW
    Scott W.
    12 September 2018 @ 13:00
    5 0
    This was great! Thank you Michael and RV!
  • AL
    Andrew L.
    12 September 2018 @ 10:11
    14 0
    This is gold. We all need a concrete process to help us mitigate these problems. Journaling is a great start.

Chapters

  1. 00:00:42
    Why do Behavioral Mistakes Matter?
  2. 00:02:42
    What's the First Mistake Investors Make?
  3. 00:05:01
    What's the Third Mistake Investors Make?
  4. 00:07:14
    What's the Second Mistake Investors Make?
  5. 00:08:36
    What's the Fourth Mistake Investors Make?
  6. 00:10:33
    What's the Fifth Mistake Investors Make?
  7. 00:12:47
    Which Mistake is Most Important to Overcome?
  8. 00:13:48
    Techniques for Overcoming Behavioral Mistakes
  9. 00:15:25
    Exploitable Mistakes
  10. 00:18:41
    Mistakes Shifting with Economic Cycles
  11. 00:20:48
    How Has Your Thinking Changed?
  12. 00:22:24
    Personal Behavioral Behavioral Biases