In 1995, Charlie gave a lecture at Harvard called "The Psychology of Human Misjudgement."
It's the best speech about Human Psychology ever.
Here's how emotional mistakes harm your investment decisions:
It's the best speech about Human Psychology ever.
Here's how emotional mistakes harm your investment decisions:
🔍 Why People Make Mistakes
Investment advisors might make decisions that benefit them more than their clients.
They might trade a lot, even when it's not needed.
Always remember that it's important to find advisors who truly care about your goals.
Investment advisors might make decisions that benefit them more than their clients.
They might trade a lot, even when it's not needed.
Always remember that it's important to find advisors who truly care about your goals.
🔍 Following the Crowd
When everyone's talking about a stock, it's easy to feel like you should buy it too.
But just because it's popular doesn't mean it's a good investment.
It's better to base decisions on facts, not what's trending.
When everyone's talking about a stock, it's easy to feel like you should buy it too.
But just because it's popular doesn't mean it's a good investment.
It's better to base decisions on facts, not what's trending.
🔍 Jumping to Conclusions
Sometimes, people buy a stock just because its price went up, even if the company's not doing well.
And sometimes they sell a good stock when the price drops.
It's better to think carefully before making moves.
Sometimes, people buy a stock just because its price went up, even if the company's not doing well.
And sometimes they sell a good stock when the price drops.
It's better to think carefully before making moves.
🔍 Being Too Hopeful
People can get really excited about a company or industry and invest too much in it.
This can be risky and lead to bad decisions.
It's smarter to spread your investments out to stay safe.
People can get really excited about a company or industry and invest too much in it.
This can be risky and lead to bad decisions.
It's smarter to spread your investments out to stay safe.
🔍 Wanting What Others Have
Seeing others make money quickly can make you want the same.
But copying their strategy might not work for you.
It's better to understand things well before investing.
Seeing others make money quickly can make you want the same.
But copying their strategy might not work for you.
It's better to understand things well before investing.
🔍 Tips from Others
If someone gives you advice about a "hot" stock, be cautious.
Do your own research before buying anything.
What works for one person might not work for you.
If someone gives you advice about a "hot" stock, be cautious.
Do your own research before buying anything.
What works for one person might not work for you.
🔍 Holding On Too Tight
When a stock's value drops, it's tough to let it go.
But sometimes, it's better to sell and find something better.
Don't let emotions cloud your judgment.
When a stock's value drops, it's tough to let it go.
But sometimes, it's better to sell and find something better.
Don't let emotions cloud your judgment.
🔍 Following the Experts
Just because a big-name investor likes a stock doesn't mean it's a sure thing.
Do your own research to understand the risks.
You can borrow someone's idea, but you can't borrow their conviction.
Just because a big-name investor likes a stock doesn't mean it's a sure thing.
Do your own research to understand the risks.
You can borrow someone's idea, but you can't borrow their conviction.
🔍 Ignoring Warning Signs
Sometimes, people don't want to see when things are going wrong.
Pay attention to signs and be ready to make changes if needed.
Ignoring problems won't help
Sometimes, people don't want to see when things are going wrong.
Pay attention to signs and be ready to make changes if needed.
Ignoring problems won't help
🔍 Being Too Sure
Feeling really confident can be good, but thinking you're always right can lead to mistakes.
Stay open to learning and don't let pride get in the way.
Feeling really confident can be good, but thinking you're always right can lead to mistakes.
Stay open to learning and don't let pride get in the way.
That's it for today.
If you liked this, you'll love Munger's talk The Psychology of Human Misjudgement as well as all his public writings.
I share them for free on my website.
Sign up here to receive it: eepurl.com
If you liked this, you'll love Munger's talk The Psychology of Human Misjudgement as well as all his public writings.
I share them for free on my website.
Sign up here to receive it: eepurl.com
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