We Study Billionaires - The Investor’s Podcast Network TIP554: Mental Models for Successful Investing w/ John Jennings
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May 21, 2023 John Jennings, President and Chief Strategist of St. Louis Trust & Family Office, shares his insights on navigating the complexities of investing. He discusses why humans are hard-wired to avoid uncertainty and how that affects investment behavior. Jennings emphasizes the importance of mental models for making smarter decisions and the common pitfalls of confusing correlation with causation. He also highlights how behavioral biases, like loss aversion, can mislead investors, and explores the role of luck in the unpredictable world of finance.
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Dealing with Uncertainty
- Recognize and acknowledge feelings of uncertainty.
- Identify common reactions to uncertainty and choose better responses.
Reactions to Uncertainty
- Common reactions to uncertainty include seizing on explanations and avoiding different viewpoints.
- This leads to becoming information junkies, relying on experts, and seeking echo chambers.
Correlation vs. Causation
- Number of books in a home correlates with educational attainment, but doesn't cause it, revealing a common cause.
- Similarly, female-led companies' performance may not be causally linked, but a symptom of other factors.
