MICHEL PIREU: Mental models help explain why only a few retail investors really succeed
Reasoning from first principles is near the top of the list of models that might lead to better decision-making
Nearly every retail investor has access to the same data, tools, techniques, books, research and analysis. So why is it that only a few succeed? Why is it that, as with life in general, the vast majority of us remain stuck in mediocrity?
Perhaps the answer lies with our mental models. How we look at things. The connections and opportunities we see. What we believe to be true, as opposed to what is true. Why two investors can interpret the same data in different ways: one deciding to buy, the other deciding to sell. If that is the answer, it’s essential that we adopt the “right” mental models to succeed. But how are we to know which ones those are?