Anchoring (explained in a minutes) – Behavioral Finance

Lesson summary: In this lesson summary, the concept of anchoring in the context of investment is explored. Anchoring refers to the tendency of investors to rely heavily on specific information, which may not be accurate or relevant. The example provided illustrates this concept: an investor notices a significant decline in a company’s stock price and […]

Prospect Theory (explained in a minutes) – Behavioral Finance

Lesson summary: A 1995 study revealed that Olympic bronze medalists often appear happier than silver medalists. This is due to their perspective: silver medalists focus on narrowly missing gold, viewing it as a loss, while bronze medalists see their achievement as a gain compared to not winning a medal. This illustrates how people value gains […]

Confirmation Bias (explained in a minutes) – Behavioral Finance

Lesson summary: The lesson on Behavioural Finance highlights the concept of confirmation bias, where individuals often see only what aligns with their existing beliefs. This bias can lead to overconfidence, especially in investing. For example, an investor may focus only on positive data supporting a stock while ignoring significant risks. The lesson underlines the importance […]

Overreaction (explained in a minutes) – Behavioral Finance

Lesson summary: A 1985 study on the New York Stock Exchange showed that investors often overreact to new information, affecting stock prices. It found that the 35 worst performing stocks actually outperformed the market, while the 35 best performing stocks underperformed. This was due to investors reacting excessively to bad news, causing stock prices to […]

Herd Behaviour (explained in a minutes) – Behavioral Finance

Lesson summary: “Herd behavior” is the tendency to follow the majority, influenced by social pressure and the desire to conform. This leads to decisions that might not be made independently. For example, during the dot-com bubble, investors massively funded internet companies despite weak business models, driven by the belief that following the crowd reduces individual […]

Gambler’s Fallacy (explained in a minutes) – Behavioral Finance

Lesson summary: The Gambler’s Fallacy is the mistaken belief that past random events affect future ones. For example, if a coin lands heads up 20 times, it’s wrongly assumed that tails are due next, despite each flip having a 50% chance. This fallacy applies beyond gambling, like in investing, where decisions should be based on […]

Overconfidence (explained in a minutes) – Behavioral Finance

Lesson summary: The lesson highlights the dangers of overconfidence in investing, illustrating that overconfident investors, who often mistake their abilities, tend to make more trades but achieve lower yields. It underscores the importance of distinguishing between realistic confidence and overoptimism, as this fine line can significantly impact investment outcomes.

Mental Accounting (explained in a minutes) – Behavioral Finance

Lesson summary: The concept of “mental accounting,” which involves treating money differently based on its source or intended use. An example given is having a savings jar for special purposes while simultaneously carrying credit card debt, which is not financially sound. People tend to spend bonuses or gifts more freely than their regular income, even […]

Learning How to Learn: A MIND FOR NUMBERS by Barbara Oakley | Core Message

Lesson summary: In the book “A Mind for Numbers” by Barbara Oakley, an engineering professor at the University of Auckland, she delves into her own transformation from struggling with math and science to mastering them. Contrary to what one might expect, Barbara did not initially have a natural ability for these subjects, even failing them […]

Success in a distracted world: DEEP WORK by Cal Newport

Lesson summary: In Cal Newport’s “Deep Work,” he champions the practice of focused, distraction-free tasks that stretch cognitive limits, terming it ‘deep work.’ Renowned figures like J.K. Rowling and Bill Gates have utilised this approach to achieve significant milestones. Newport argues that such intense concentration not only boosts productivity but also enhances neural circuits in […]

SPRINT by Jake Knapp, John Zeratsky, Braden Kowitz | Animated Summary

Lesson summary: I recently explored the book “Sprint: How to Solve Big Problems and Test New Ideas in Just Five Days” penned by Jake, John, and Braden from Google Ventures. This division of Google not only invests in startups but also supports them in developing new products and overcoming challenges. They formulated the ‘sprint method’ […]

Validate your business idea: THE LEAN STARTUP by Eric Ries

Lesson summary: Eric Ries’s “Lean Startup” presents a methodology for developing products and businesses. Ries’ own experiences with his Silicon Valley startup, IMVU, underscored the importance of understanding customer desires. After spending six months integrating various instant messaging services into their product, they discovered, through direct feedback, that customers didn’t value these integrations. This led […]

How to Innovate: LITTLE BETS by Peter Sims

Lesson summary: In “Little Bets” by Peter Sims, the concept of making small, experimental actions to develop and test ideas is explored. Using examples such as Chris Rock and Pixar Studios, Sims illustrates how perfection in the final product is achieved through iterative processes and embracing initial imperfections. Rock, for instance, tests new jokes in […]

Innovation 101: COMPETING AGAINST LUCK by Clayton Christensen | Animated Core Message

Lesson summary: In the pursuit of innovation, companies often rely on luck rather than a systematic approach, resulting in wasted resources and dissatisfaction. Clayton Christensen, in his book “Competing Against Luck,” argues that effective innovation is not about improving products in isolation, but about understanding what ‘job’ customers ‘hire’ the product to do. By employing […]

Make the competition irrelevant: BLUE OCEAN STRATEGY by W.C. Kim and R. Mauborgne

Lesson summary: The “Blue Ocean Strategy” by W. Chan Kim and Rene Mille Bornes proposes that rather than competing in saturated markets, businesses should focus on finding and exploiting untapped markets, or “blue oceans”. In these uncontested markets, businesses can thrive without battling competitors. The authors’ study revealed that despite making up only a small […]

ORIGINALS by Adam Grant | ANIMATED BOOK REVIEW

Lesson summary: In “Originals” by Adam Grant, the author explains the dichotomy between conformity and originality, with the latter involving novel ideas that challenge conventional thinking to improve the status quo. Despite the internal fears and doubts faced by originals, they are distinguished by their willingness to act, understanding that not trying can be more […]

DECISIVE by Chip and Dan Heath | Animated Core Message

Lesson summary: Throughout our lives, we’re faced with numerous crucial decisions, yet troublingly, individuals often express regret over the choices they make. To make more informed decisions, it’s essential to be aware of three primary pitfalls identified by authors Chip and Dan Heath in their book “Decisive.” Firstly, individuals often limit themselves to considering merely […]

The Habit of Top Professionals: THE CHECKLIST MANIFESTO by Dr. Atul Gawande

Lesson summary: In “The Checklist Manifesto” by Atul Gawande, the importance of using checklists in high-stakes professions is emphasised. Gawande, a surgeon, recognises the dangers of avoidable human errors in surgeries, which can be fatal. Drawing inspiration from the construction and aviation industries, which have successfully minimised human errors by adhering to checklists, Gawande introduced […]

SCRUM: Twice the Work, Half the Time

Lesson summary: In the book “Scrum: The Art of Doing Twice the Work in Half the Time”, Jeff Sutherland introduces a revolutionary project management system called Scrum. This method addresses the fundamental flaws in traditional project estimation which are prone to cognitive biases like the planning fallacy and the sunk cost and status quo biases. […]