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Kahneman in "Thinking Fast and Slo" has a section on when experts can trust their intuitions. For example, fire fighters can. Investment does not fit the criter

by qznc 10y ago

Kahneman in "Thinking Fast and Slo" has a section on when experts can trust their intuitions. For example, fire fighters can. Investment does not fit the criteria because the payout is inconsistent. You sometimes win although your decision was bad and sometimes you lose although your decision was sound. Your intuition gets fucked up by the weird outcomes.

barry-cotter 10y ago
Does this imply expertise in investment doesn't exist? Because the payout in poker is inconsistent but expertise clearly exists. The people who end up at the top table are much more consistent than would be expected by chance. There is also a relatively clear skill ranking. If two people play casino poker and consistently profit but one plays at 1-2 tables and the other at 10-20 the second is definitely better.
- tsunamifury 10y ago
  He lables them "wicked markets" and essentially describes them as any market where any winning strategy is almost instantly mitigated and results in a loss. So not every poker market is wicked, which is why you see good players always seeking tables of suckers.
- dharmon 10y ago
  No, he means it "fucks with your intuition" in the same way as poker, but potentially more confusing because the probabilities are not known. For example, in poker you may call with pocket Kings and lose, yet with hindsight it is still clear that you made the right decision. The probabilities say so. In investing, even after you lose money, it can sometimes be quite difficult to determine if you made a mistake or not, since the probabilities are never known. For example, did Mohnish Pabrai and Guy Spier make a mistake with Horsehead Holdings? The only clear mistake I can see is Pabrai's position sizing, but it is not clear to me whether the investment itself was a mistake or not.
- qznc 10y ago
  There are poker experts, but they do not use their intuition (very much). Poker teaches you to make rational decisions while your intuition screams something different.

by qznc 10y ago

barry-cotter 10y ago

Does this imply expertise in investment doesn't exist? Because the payout in poker is inconsistent but expertise clearly exists. The people who end up at the top table are much more consistent than would be expected by chance. There is also a relatively clear skill ranking. If two people play casino poker and consistently profit but one plays at 1-2 tables and the other at 10-20 the second is definitely better.

tsunamifury 10y ago
He lables them "wicked markets" and essentially describes them as any market where any winning strategy is almost instantly mitigated and results in a loss. So not every poker market is wicked, which is why you see good players always seeking tables of suckers.
dharmon 10y ago
No, he means it "fucks with your intuition" in the same way as poker, but potentially more confusing because the probabilities are not known. For example, in poker you may call with pocket Kings and lose, yet with hindsight it is still clear that you made the right decision. The probabilities say so. In investing, even after you lose money, it can sometimes be quite difficult to determine if you made a mistake or not, since the probabilities are never known. For example, did Mohnish Pabrai and Guy Spier make a mistake with Horsehead Holdings? The only clear mistake I can see is Pabrai's position sizing, but it is not clear to me whether the investment itself was a mistake or not.
qznc 10y ago
There are poker experts, but they do not use their intuition (very much). Poker teaches you to make rational decisions while your intuition screams something different.