Insights:

1. Female hedge fund managers consistently outperform male colleagues because they demonstrate more patience.

References:

1. "Never underestimate the power of doing nothing." - Winne the Pooh

Principles:

1. The best way is often to do less than you think you should.

Definition: The tendency for a current emotional state to influence risk perception.

Quotes:

"It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

- Charlie Munger

"invert, always invert."

- Charlie Munger

Principles:

1. Consider the other side. What might you be wrong? Examine your own ideas critically.

Definition: Seeking out information that confirms a thesis, and ignores disconfirming information. The human tendency to look for information that reinforces ideas we already hold.

Insights:

1. In receiving feedback we can display confirmation bias in two ways: self-verification - the tendency to pay attention to information that reinforces existing beliefs; and self-enhancement - paying attention to information that makes us feel good about ourselves.
2. Confirmation bias is a problem when we maintain our beliefs despite disconfirming evidence or ignore reality.
3. Confirmation bias can have a significant negative impact on our lives, particularly with financial decisions.
4. Confirmation bias combined with anchoring can lead us to project the past or current situation far into the future, and under-react to new information.

Definition: The tendency to overvalue things simply because we own them.

Examples:

1. Stocks.

Insights:

1. Humans have a tendency to reinforce existing beliefs, and look for information that makes us feel good about ourselves.

References:

1. Named after P.T. Barnum, circus entertainer who said "there is a sucker born every minute". He used his knowledge of people to get them to part with their money.

Definition: The effect that makes us quick to appraise ourselves based on external circumstances, but not give others the same treatment: we see others' failures as internal.

Examples:

1. When you personally are unkind it is because you are having a bad day but when someone else is unkind to you, they are a terrible person.

Insights:

1. The danger of the fundamental attribution error is that leads us to overweigh the potential upside of our decisions, but underweigh the downside and risks.

Insights:

1. People often form investment strategies based on what has worked recently rather than a cohesive strategy.

References:

1. Daniel Kahneman: "hindsight bias leads observers to assess the quality of a decision not by whether the process was sound but whether its outcome was good or bad."

Insights:

1. We discount rewards in the future relative to those in the present.

Insights:

1. Ego risk in projects: the belief that one's involvement makes a project more valuable or likely to succeed (IKEA EFFECT).

Definition: The proneness to believe that we are more in control of outcomes than we actually are.

References:

1. Ancient Rome: Victorious military leaders paraded the streets to be celebrated, but were accompanied by a slave who would whisper to the leader "memento mori" to remind the leader that everything is impermanent.

Principles:

1. It is natural to celebrate our successes, but we should always try to remain grounded, and acknowledge that the good times will not last forever.

Insights:

1. The way that we frame accounts influences our behaviour.

Definition: [As related to stocks] we view stocks as less risky if we are more familiar (exposed) to them.

Examples:

1. The preference for domestic stocks over international ones, regardless of quality [or legislation].

Insights:

1. We tend to think of unfamiliar things as more risky.

Definition: The mistaken belief that we are less likely to experience negative events than others.

Insights:

1. Emotion leads most people to underestimate the possibility of negative things happening to us.

Insights:

1. Recent success is not always a guarantee of future success.
2. Romans leaders overcame recency bias whenever they had a military success by having a slave whisper "Memento Mori" (remember that you will die) behind them in the victory parade to limit excessive pride based on recent events.

Definition: The human preference for things to remain as they are.

Insights:

1. We fall victim to the Sunk cost Fallacy whenever we take further risks to recoup past losses.