There are so many ways to lose, but so few ways to win. Victor Niederhoffer wrote the following in The Education of A Speculator: In tennis, this is called unforced errors. Any stock analysis should be based on a checklist. But investing and trading should be about System 2 decisions, and checklists are a tremendous tool in achieving that. On the savanna, we use System 1 decisions (run for cover instinctively). The more tasks and the more complex, the more valuable checklists are. ![]() Subsequently, mistakes are made – often with catastrophic mistakes. Humans are lazy and prone to shortcuts, consciously or not. Checklists are extremely effective in preventing mistakes when facing complex and/or repetitive tasks. Before every take-off or landing, a checklist is meticulously worked through – “flaps dow?”- “checked”. ![]() whether running to the store to buy ingredients for a cake, preparing an airplane for takeoff, or evaluating a sick person in the hospital, if you miss just one key thing, you might as well not have made the effort at all.Īs mentioned, the aviation industry uses checklists extensively. Let’s summarize what we consider to be the main takeaways from the Checklist Manifesto: What are the main takeaways from The Checklist Manifesto? Pabrai says this has avoided many poor investments. Most likely, Buffett has only a mental checklist, while we believe Munger has a written one.īoth Munger and Buffett liked The Checklist Manifesto, and Gawande was subsequently hired as CEO for the healthcare project between Amazon, Berkshire, and JP Morgan.Īnother famous investor, Mohnish Pabrai, has a checklist he runs through before every investment he makes. The book is a typical Charlie Munger book and he has praised Atul Gawande’s book. Warren Buffett and Charlie Munger use checklists If we don’t use the checklist, important steps are guaranteed to be forgotten. How many mistakes boil down to misuse, system 1 decisions (to refer to Daniel Kahneman), or simply forgetting to do certain steps?įor example, this article is written by using a step-by-step checklist of things “to do” before we press the publish button. We believe this to be equally true for trading. Failure, he argues, stems not from arrogance, but from not applying what we know works. As he wrote in his book, there is no point in having knowledge if we fail to adapt it in a timely and orderly manner. In his profession, Gawande discovered that checklists could also reduce life-saving mistakes during surgery.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |