YouSaid · the spoken record

John Jennings

lines on the record: 67
first: 2023-05-21
most recent: 2023-05-21
sittings or episodes: 1
sources: podcast

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“Common cause, right? You know, smart educated people buy more books, smart educated people tend to have children that go on and achieve higher educational success. So that was that example there. And there's all these other things with causation. And again, it comes back to our dislike of uncertainty. Like we want the world to make sense and we want to have a cause or an explanation. And sometimes it's difficult. And another story I tell the book, which was really quite humbling, is I was at this investment conference, you know, years ago, probably, you know, probably five years ago. And you know how these investment conferences go? Like you have all day of like talks and everything and then you have like a cocktail hour and then dinner. So as I'm sipping my probably $12 a bottle glass of wine, I was talking to this woman who's the CEO of an investment firm. And it was pretty new. It was only around for three or four years. And I was like, so what does your firm do? And she said, oh, what we do is very simple. We only invest in companies that.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I have an entire chapter in my book called Looking for Causes in All the Wrong Places. So it's all about causation and correlation and full of stories and examples. And the one you mentioned on books and educational attainment looked at the number of books in a home and educational outcomes over 27 different countries. And this study was popularized in the book Freakonomics. And it's really the point of what the Stephen Lovett and Stephen Dubner said in freak economics is they dug into this was really the answer is that there's this common cause. So if educational success is the result, the books, having the books in the home didn't cause that. It was a symptom of the sort of parents that they were, right? Both their genetics and their view of learning, you know, the type of person that buys a lot of books was correlated with higher educational outcome. Their children having a higher educational outcome. So it was like this.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, exactly. And we get to the point where we surround ourselves with people who think the same and we consume the same media and the same social media. And it seems like it's not possible that other people think something different.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“Doing research for this book, I came across this comment by a sociologist, which I think is spot on and is one of the biggest things that has shifted my worldview of how people can have such differing views of what the truth or facts or reality is. And that is the truth is whatever your social group believes it to be. So, you know, whether it's politics or the economy or religion or all these other things, like whatever your social group thinks the truth is is what you think the truth is. It's like, wow. So when we feel uncertain, that's not a time period where we want to go and debate or hear from people all these differing points of view from our own. We tend to insulate ourselves.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“Isn't productive and can actually be counterproductive. You may think that you've come up with answers when there's no real answer. And a great example of this, and another thing we do when we're faced with uncertainty, is we turn to experts for their predictions of the future. And experts definitely can predict the future in areas like engineering and medicine and these other things. When you have things like the stock market and the economy or even geopolitics, the ability of experts to predict the future is just really, they have a real poor track record, but we find ourselves, you know, in fact, I have to resist it, you know, clicking on these articles where some famous guru is telling us what's going to happen in the future. And again, we feel like we've got a dose of certainty when you have somebody that's a confident expert that tells you what's going to happen in the future. And one of the final things we do is we like to associate with groups that think like we do.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“Know what was happening, so we would seize on explanations for what was happening, and then we would stick with it, even if the science had changed or the virus had changed. And so we tend to grasp these explanations and don't tend to change our minds or our worldview. So that's the seizing and then the freezing. Another thing we do is we become information junkies. And I've done this when there's economic uncertainty. I definitely did this in COVID when COVID-19 was first flying out is we also get a hit of dopamine when we take information. And when things are uncertain and what we want to do is we want to find answers. And especially with the internet and social media and everything, it's more easy than any other time in human history to search for answers and to search for clues. And that can be great. So if you have something that is unknown, that can become known, searching for more information is great. But if you have something that's just unknowable, flanneling around searching for information.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“Exactly, that is spot on, yeah. And what we usually do when faced with uncertainty, there's a lot of different things, but there's four big ones. And the first one is we have this, what's known as the need for cognitive closure. So when we feel uncertain, what we do is we become hypervigilant, we look for answers. And what we want is we want an explanation. We want the world to make sense. So we tend to do what's known as seizing and freezing. So we seize on the first explanation that hits our worldview. And then we freeze on it. So we don't want to revisit that uncertainty in the future. So we defend it. So you have this situation of this probably not super well thought out or researched response of seizing an explanation. And then we freeze on it. Like, that's it. And, you know, I think COVID, you know, the pandemic was this great example of that for so many people, myself included, which is we did.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“To recognize, here are the things that people usually do when they're feeling uncertain. And then what should I be doing instead?”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think the first step, and probably the most important thing, is to learn, to recognize when you're feeling uncertain and that you are really, you know, failing around looking for certainty. Because again, it's something that most people aren't aware of. And even whether you're aware of it or not, this quest for certainty is going to drive so much of your behavior, even if you don't realize it. So if you can just like turn the light on to the fact that you're feeling uncertain and then just own it. So, you know, what I say to myself is, so I have this like alternate name, you know, for takeout. And just because I didn't feel like John totally captures my essence of who I am. So this alternate name of Kiefer. And so what I do is I say to myself, when I'm feeling uncertain, I say, you know, Kiefer, you are feeling uncertain. And that's the first and the key step. Like if you can do that, like you're most of the way there.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“Out when. And I know a few weeks ago on your podcast, you guys had Howard Marks on the show, and he's an example of someone with his memos and his books. And just like, you just hear him. And he has these mental models that he falls back on. And like, for instance, I heard him at a conference back in October of 2022. And people were asking him, like, what's your opinion of the future? And he was like, this is such a great mental model. He's like, okay, you can't really predict the future. And those that predict the future don't do a very good job. But that doesn't mean you can't have an opinion. It just, it means that when you have an opinion, you should realize with humility that you're probably not right and wait that accordingly. He goes, so with that, I'm going to tell you what I think is coming. And I realize that there's probably a less than 50-50 chance I'm correct. And at Oak Tree, when we invest, we have opinions, but we also build in other scenarios and other things that could happen. And we don't go all in. And like, wow, that is.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“Don't really have for the most part malice in their hearts towards other people. You know, if you don't get an email returned or you get ghosted for a lunch meeting or your brother forgets your birthday or you're cut off in traffic, what have you, I think it's great to apply this and go, you know, I'm just going to give this person, you know, the benefit of the doubt. So that's an example of a mental model. And since I learned of this mental model probably 15 years ago, I use it all the time. And it really saves my own emotions. It saved relationships. I hope people use it with me. I'm not actually that great of a email responder. So that's an example of a mental model. And what I found as I was researching how to become a better investor, really to help me and my colleagues become better advisors and then to help our clients be better consumers of investment advice. I found that really what great investors do is they have a lattice work of mental models. They have these things that they fall back on that are true and they know which ones to pull.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“So he talked about this, the first record I could find of it was back in 1994, a speech to the USC Business School. And really what a mental model is, is it's just a model we keep in our heads, but it's how the world really works in particular instances. And in reading about quite a bit in books on mental models, what you come to realize is we all have mental models on our heads. But unless you spend time and effort to put correct ones in, you can have things that aren't true or you know will jump to things just emotion that make bad decisions without having the appropriate mental models. And it takes study, right? So it's not like, oh, I can just read of something once and there it is. But one that I love, and this is one that Charlie Munger has mentioned, is Hanlon's razor. So this is a great example. And, you know, if you've ever sent an email and not gotten a response, you often feel a little irritated or maybe even hurt, maybe even angry.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“Around acres, right? And I remember once a decade ago, my dad was like, I don't know if the fence is on. Will you touch it and see if it's on? And again, it would be like a pretty big shock. And I was like, no, there's absolutely no way I'm going to touch this fence because I don't know, right? And he kind of goaded me into it and made me feel wimpy. So I did. And it wasn't on. But I remember just like just the adrenaline rush. I can still feel it. Just thinking about, am I going to get shocked or not? Just the uncertainty was just terrifying.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“Absolutely. And that study is pretty interesting. And really, what it found is, you know, as the study volunteers and how fun it shocked people. So this was a video game they played. And if they turned over a virtual rock and there was a virtual snake, they got shocked. So they played around with could they see a pattern to avoid the shocks? Could they see no pattern? So they got shocked about 50% of the time randomly. And then there was a pattern, which was they're just going to be shocked every time. And that was actually a stress situation similar to being able to avoid the shock. So it went like this pattern, no pain, low stress. No pattern, 50% pain, high stress. Pattern, 100% pain, low stress. So pretty interesting stuff. And to your point, exactly, if you think about it, if you knew you were going to be shocked, you would just steal yourself against it. But if you didn't know, so like my parents have horses and they have like this, you know, like electric fence. So it's really, you know, just like it's just like a wire going.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“Really, our relationship with uncertainty is not just straightforward like, oh, we always dislike uncertainty. We actually like a bit because we love how it feels when we resolve it. So that's why, you know, often we'll not want to know the ending of a novel or a movie. It's why some people like to gamble. It's because they crave the, let's create some non-threatening uncertainty and let's ride that kind of wave of adrenaline and stress and then feel fantastic when it's resolved.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“Into the future, which is a huge survival advantage. So if you can recognize the patterns of, let's say, migration of prey or weather patterns or those berries or mushrooms, are they nutritious or are they poisonous? I mean, all sorts of patterns gives you a survival advantage. So the way we've evolved is that when we can see a pattern, we feel good about things and when we can't recognize a pattern, which is really the very definition of uncertainty, we become antsy. We become anxious. We worry. in some instances can trigger actually our fight or flight response. So those things that we do in response to uncertainty that we may not even realize are going on. And then once we resolve uncertainty, everything reverses instead of the fight or flight response or parasympathetic nervous system kicks in. It's the relaxation response. We calm down. And importantly, we get a little dose of dopamine, which is pleasurable. It feels good.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT
“I've been fascinated with uncertainty and how I personally and then humans in general deal with uncertainty for a long time. And in fact, I thought the book I was going to write was going to be completely about uncertainty. So even though the title is the uncertainty solution and it's a theme that runs throughout the book, really the book, and I'm sure we'll get into this, is more about investment mental models. What's fascinating is that uncertainty or our quest for certainty to resolve uncertainty is what's known as a primary human motive. So we may not even understand that a lot of our actions and what we do, you know, really an underpinning is the fact that we don't like uncertainty. And it makes sense from an evolutionary standpoint. So if you think back, you know, if you were a human living in 10 or 100,000 years ago, your ability to recognize patterns gave you a survival advantage. Because if you recognize a pattern and then the pattern persists, it allows you to see.”
2023-05-21 · We Study Billionaires · TIP554: Mental Models for Successful Investing w/ John Jennings · IDENTIFIED FROM THE TRANSCRIPT