The way you think and then respond to a given situation or event can sometimes make the biggest difference to your journey. It can be the reason for your success or can cause failure. Thus, more than anything else, it is important to understand why you respond the way you do and how you can control your responses.
In his path breaking book, ‘Thinking, Fast and Slow’, Nobel Prize winner Daniel Kahneman helps you comprehend critical thinking processes like judgmental errors, decision making, perception, analytical thinking, and irrationality. Listen to this Podcast by Edelweiss MF to learn how you can let your thoughts impact your actions.
- There are two players in our minds. One is named System 1 and the other is named System 2.
- System 1 is intuitive and has almost automatic reactions.
- System 2 concentrates on activities that demand attention, including analysis and calculations.
- To make rational decisions, both System 1 and 2 are required. System 1 is where a lot of action takes place while System 2 is where all the rational thinking takes place.
- You must leverage both systems so that you can address doubt and let rational thinking take over.
- You should focus on sharpening System 2 as it supports System 1.
- By using both systems while investing you can ensure that your decisions are rational and not impulsive and emotional.
- By leveraging both the systems, you can also use human psychology to make the best decisions and build robust business models.
Daniel Kahneman’s book sheds light on one of the most important aspects of decision making. You can listen to the podcast on the Edelweiss Mutual Fund website, Spotify, Google Podcasts, and Apple Podcast. We hope you enjoyed this podcast and will tune in to listen to more such podcasts on investing nuggets. If you are a bookworm then you can also read the book summary here.