We have discussed 17 of the 25 tendencies, this article will aim to conclude the series with the remaining 8 tendencies. Let's get right to it
18. Availability-Mis Weighing Tendency
The ability to give a higher weightage to the information available right in front of the individual is called Availability mis-weighing tendency. Another word for it could be Recency bias. An idea or fact is not worth more merely because it is available.
This can lead to mistakes in investing where we chase higher returns because the 'same thing' worked recently or as if assuming that all the market crashes that come will be the same like the last one.
A simple way to avoid this is to keep a checklist, which helps you stay rational while making a decision and as objective as possible.
19. Use-It-or-Lose-It Tendency
This is a tendency that all of us would have experienced in our lives. I will give you my example. I love playing chess but couldn't play for a few weeks because of exams. After my exams, I could visibly see the difference in my game play, and it had become worse than before.
Munger talks of the importance of practising every day, which will not only help refine skills but also maintain them.
It goes without saying how important it is to stay involved in the markets, not necessarily by acting on something but by being caught up with the earnings season or just news updates.
20. Drug Misinfluence tendency
You don't need an explanation for this tendency; chemical dependency on any substance is destructive and should be avoided.
21. Senescence-Misinfluence Tendency
As we grow older, it becomes increasingly difficult to acquire new cognitive skills. However, we can definitely try to maintain the cognitive skills we already have. This is quite similar to the Use it or lose it a tendency, as Munger emphasizes the importance of continuous learning and finding joy in it. He says that doing so will help delay the inevitable effects of getting old.
22. Authority-Misinfluence Tendency
Humanity has a hierarchy-based system, where most of the people have a leader and collectively put their trust in him/her. This can be a double-edged sword as the actions of the leader can severely impact the lives of the followers, for good or bad.
Hence, it becomes very important to decide who must be appointed. In the stock markets, a lot depends on the management and the decisions they make and hence, developing an objective way to assess leadership is quite necessary.
This reminds me of Karna, from Mahabharata. If he had chosen the side of Pandava he would have been the rightful king of Indraprastha but instead, he chose loyalty and supported Duryodhana. This action ultimately led to his demise.
23. Twaddle tendency
People love to talk, but the only problem is that we don't know more than half of the things we are talking about. This is the Twaddle tendency. As recipients of continuous twaddle, we need to learn how to separate wheat from the chaff and focus on what really matters.
Moreover, to ensure we aren't classified as people who keep talking of things that we don't know of, learn to understand our circle of competence and just say 'I don't know' when it's out of our expertise.
24. Reason-Respecting Tendency
Understanding the 'why' behind any action can greatly and positively influence an individual's learnings and passion. It was used by Carl Braun who designed oil refineries where each task he gave included a reason of why that task was necessary. Munger gives an example of how it can be used for manipulation as well, where people are more willing to allow someone to cut the line even though the reason they have is dumb.
its a strong tendency, and especially strong in the markets as all of us try to understand the reason behind the rise and falls, and tend to believe any reason that is quick and easy to understand.
Charlie Munger laid out a detailed explanation of his observations of the human mind from his experience of dealing with the markets and people for more than multiple decades. I think it's extremely important we use this opportunity to understand and tackle these tendencies and appreciate Charlie Munger for the work he has done. This marks the end of the whole series; however, you must have noticed that I have covered only 24 of the 25 tendencies. The remaining one is the Lollapalooza effect, which joins all the tendencies discussed above. I will try a separate article on that, as it's one of the strongest and most essential tendencies to understand.
Until then, shoot me a message and let me know what tendencies you have fallen prey to and how you have tackled them.
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