How can heuristics be applied to institutional investing today, and as complexity increases in alternative allocations, can investment decision-making be challenged by current schools of thought to achieve better outcomes? To explore these questions, the Improving Alpha podcast welcomes Gerd Gigerenzer, Director Emeritus at the Max Planck Institute. Listen in below.
Michael Oliver Weinberg, co-founder, Improving Alpha Podcast Series
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Albert Einstein is often quoted as stating, “The intuitive mind is a sacred gift and the rational mind is a faithful servant.” As a society today, in this unstable world, you need both to accelerate success while avoiding defensive decision-making. Instead of taking up that defensive position, have the courage to go with more robust yet easier strategies blending data and intuition together.
There’s no better guest to help us navigate the field of heuristics and how institutional investors can apply psychology today than Gerd Gigerenzer , Director Emeritus, Max Planck Institute for Human Development. In this latest Improving Alpha discussion, Gerd tells us why he gave up his life as a musician and chased his dreams in the field of academia, eventually writing several books, such as:
Gut Feelings: The Intelligence of the Unconscious
Risk Savvy: How to Make Good Decisions
Simple Heuristics That Make Us Smart
How to Stay Smart in a Smart World
Calculated Risks: How to Know When Numbers Deceive You
Additional discussion points in this podcast include:
- What is the purpose of the Max Planck Institutes around the world, and how can they impact the lives of those in the financial space?
- What is a heuristic?
- Quarterly Reporting: Aswath Damodaran recently expressed his opinions on quarterly reporting. What does Gerd believe when it comes to the value of quarterly reporting for companies today?
-The concept of volatility and what it means today for those working in finance.
- Why did Harry Markowitz avoid using his own Nobel-winning prize method in choosing his own investments in retirement, favoring a simple heuristic that is equal to 1/N?
- What is the Turkey Illusion, and why can this be applied to shocks like the financial crisis of 2008 and the Great Depression?
- How can AI be leveraged in both an uncertain world and a more narrow/stable situation? Are there different applications?
- And more.
Gerd Gigerenzer is Director Emeritus at the Max Planck Institute for Human Development and founder of the Harding Center for Risk Literacy. A former professor at the University of Chicago, he is internationally known for his research on decision-making under uncertainty, heuristics, and statistical literacy. His work challenges conventional ideas of optimization and highlights how simple, well-designed rules can lead to better outcomes in complex, uncertain environments.
About Our Host: Michael Oliver Weinberg, CFA
For three decades Michael has invested directly at the security level and indirectly as an asset allocator in traditional and alternative asset classes. Most recently he was a Managing Director, Head of Alternative Alpha, on the Investment Committee, and a board member at APG, a Dutch pension provider. Previously he was the Chief Investment Officer at MOV37 and Protege Partners. Michael is also an Adjunct Professor of Economics and Finance at Columbia Business School, where he teaches Institutional Investing, an advanced MBA course that he created.
Michael is a published author, having written for The New York Times, international investment books, and other publications. Michael has been interviewed by the Wall Street Journal, Financial Times, CNBC, Bloomberg and Reuters. He is a frequent panelist, moderator and lecturer for investment banks, institutional and family office organizations, and business schools.
The information covered and posted represents the views and opinions of the guest and does not necessarily represent the views or opinions of Vidrio Financial, and/or our host, Michael Oliver Weinberg. The Content has been made available for informational and educational purposes only. The Content is not intended to be a substitute for professional investing advice. Always seek the advice of your financial advisor or other qualified financial service provider with any questions you may have regarding your investment planning.