Value investing · Course 19 of 39 · The practice
Behaviour and decisions
How judgement fails in investing, and the tools that catch it: base rates, checklists, pre-mortems, a decision journal, and judging process over outcome.
For a reader who already researches companies and wants to stop losing ground to their own judgement, not to the market.
Investing decisions are made under uncertainty, repeated too rarely for experience to teach fast, and reviewed afterward by a memory that edits itself. This course names four biases that recur in research, starts a forecast from the outside view, builds a checklist from your own mistakes, imagines a decision already failed before it is made, and writes the reasoning down at the time it is made. It closes by judging a decision on its process, not on how the price moved.
After it you can name where judgement fails in research, build a checklist from your own mistakes, run a pre-mortem before a decision, keep a decision journal hindsight cannot rewrite, and separate a good decision from a lucky one.
It assumes The value investor's mindset and Accounting quality.
The method, not the running of it
Behaviour and decisions is 7 lessons on running the whole method on one company. Running it is the part that only happens against real filings, on a real date, and this course has none of yours. It also cannot tell you the day one of your reasons stops being true, which is the part that matters after you have bought.
See our methodology for how the product reads a filing and what it refuses to compute.