Understanding Behavioral Economics: How to Beat the Market with Jeff Henriksen
Jeff Henriksen is the Founder and CEO of Thorpe Abbotts Capital, a behavioral-focused hedge fund focused on exploiting systematic biases in public markets.Listen in!Key Highlights:[00:01 - 13:24] Behavioral Finance and the Stock MarketHuman beings are influenced by biases and these can lead to mistakes in investment decisionsThe efficient market hypothesis and why individual investors cannot outperform the marketCrowd wisdom on making accurate predictions based on the collective knowledgeHow the measure of free cash flow and the discount rate of an evaluation are affected.[13:25 - 39:06] Beware of Systematic Investor BiasThe levels of happiness based on gains and losses relative to a reference pointRisk-seeking behavior has profound implications on markets and security pricesHow revenues and debt levels do not become indicative of distressBeware of value trap companies - looking promising but may be eroding rapidly[39:07 - 41:29] The Importance of Disproving Your Own ViewsMarkets are a lot more efficient than a lot of active managers realizeStart out most investment thesis from a bearish perspective and disprove the bearish thesisTo not be overly optimistic that the market's just throwing out great opportunities all the time[41:30 - 42:57] Closing SegmentEmail Jeff via jeff@thorpeabbottscapital.com and check out his website https://thorpeabbottscapital.com/ for more information!Key Quotes:“If your job as an investor is to go out and try to beat the market, you know, our view has always been well, I want to find out what parts of the market have a lot of correlated errors, then I can exploit or have a higher probability of having higher correlated errors because those were the mistakes exist. And that's where we can find an opportunity.” - Jeff Henriksen“What I've learned is to be very critical of our own views. And to not take the market's judgment lightly.” - Jeff HenriksenConnect with Jeff:Website: https://thorpeabbottscapital.com/ Email: jeff@thorpeabbottscapital.com Resources MentionedThinking, Fast and Slow by Daniel KahnemanConnect with me on LinkedIn!LIKE, SUBSCRIBE, AND LEAVE US A REVIEW on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in and Stay Tuned for the Next Episode COMING SOON! Hosted on Acast. See acast.com/privacy for more information.