Quick thinking leads to bad behavior

Alex Bryan, Morningstar’s director of passive strategies for North America, shares key insights from Daniel Kahneman’s ‘Thinking Fast and Slow’

Alex Bryan 1 March, 2019 | 6:00PM

Humans are not wired to be good investors. To survive in the wild, we developed a tendency to rely on mental shortcuts to process information quickly, which is helpful for avoiding danger and taking advantage of fleeting opportunities. But this can be a hindrance to the unnatural act of investing.

Psychologist and Nobel laureate Daniel Kahneman explores how people process information and the biases that mental shortcuts can create in his book, “Thinking Fast and Slow.” While the book isn’t specifically about investing, it explains why we often do dumb things as investors, and is well worth a read. Here, I’ll share some of the key insights from the book and how we can learn from them to become better investors.

A Two-Track Mind

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About Author

Alex Bryan

Alex Bryan  Alex Bryan, CFA, is director of passive strategies for North America at Morningstar. Before assuming his current role in 2016, he spent four years as an analyst covering equity strategies. He holds an MBA with high honors from the University of Chicago Booth School of Business.

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