Dr David Allen from Plato Investment Management examines how behavioural biases shape investment decisions. His presentation covers overconfidence, the hot hand fallacy, loss aversion, anchoring, base rates, herding and confirmation bias.

Topics include:

  • What a sharp rebound in short positions taught Allen about complacency.
  • Why he questions the persistence of exceptional company growth.
  • How waiting to break even can influence decisions about losing holdings.
  • How a hypothetical IPO price can become a valuation anchor.
  • Why the search for the next NVIDIA should include historical success rates.
  • How Plato uses automated red flags to challenge company assessments. Allen concludes with the practical checks he advocates: express conviction as a probability, seek evidence that could disprove the thesis, reassess the portfolio from cash and systematise the investment process.

Chapters

  • 0:00 The seven deadly sins of investing
  • 1:45 Overconfidence: how good an investor are you?
  • 5:52 The hot hand fallacy: chasing exceptional growth
  • 8:08 Loss aversion: the urge to break even
  • 10:47 Anchoring: when a price shapes your valuation
  • 11:40 Base rates: could this be the next Nvidia?
  • 14:09 Herding: the pull of the crowd
  • 15:38 Confirmation bias and company red flags
  • 17:21 Building a process to keep bias in check

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