risk aversion is a “trait” that appears and has been successfully bred in mice; it’s a long and wide research tradition in personality psychology, and it appears negatively related to the “traits” of sensation seeking and extraversion. despite some interesting work in the late 1990′s there has not been much consolidation of the field of personality psychology around “computational” metaphors.

to the question: yes, risk aversion, however you choose to measure it, appears as a dimension of individual behavioral difference across many biological species; it can be bred (inherited) but also is related to many aspects of individual experience (for example, the nurturing style of an infant’s caregiver), it affects learning and decision making, and it appears to have a neurological basis, like everything else we do.

Too much self control and you’re dogmatic and a control freak. Not enough and you’re all over the place.

My big thing in University was to mentally calculate how much time I would need to invest for an A vs. the A+. It usually followed the 80/20 rule. Then I would evaluate how importnat that A+ was in the grand scheme of things. Since I had many interests, it would essentially be the maximizing of a Lagrange equation!

Some people exercise incredible self-control as a risk control mechanism, others as a way to maximize their utility out of life.

Instead, their government confiscates it and hands it over to the less disciplined ones as a bailout…

—————-
Funny comment. But that would mean that impulse control is innate and can not be learned.

If there were never any benefits to waiting, a person would soon stop waiting.

June 19 (Bloomberg) — Continental AG, Europe’s second- largest car-parts maker, said it will delay June paychecks by “a few days” to ensure that it meets loan commitments.

I believe they are trying this novel method in California, from the state to the taxpayer…

“But some people are no longer comfortable with that logic. There’s even a new study that contends holding stocks over long periods of time may be riskier than previously thought. Robert F. Stambaugh, a finance professor at the Wharton School at the University of Pennsylvania and a co-author of the report, said most investment research only accounted for the risk of short-term market swings around the stock market’s average gain over time. It doesn’t factor in the fact, he said, that the average itself is subject to change. ”

“If another decline in the market is going to bankrupt you or put you out of business or destroy your retirement account, you should not go back into the stock market,” said John C. Bogle, the founder of Vanguard and viewed by many as the father of index investing. “It’s not complicated. The stock market can go up and down a lot and nobody really knows how much and when.”

Report: Economically Disadvantaged Men More Skilled At Communicating Attraction To Women
http://www.theonion.com/content/node/28017

It could be that the investor having sucessfully accrued funds to invest with, who has thereby demonstrated his ability to delay gratification, who then accepts further delay by investing those funds for further gain, is poorly adapted for the investment world.

The contrarian recognizing this inate dissonance understands that what worked for the majority before they started investing can be used against the majority after they start. The majority will wait for a clear trend do develop once they are confident in it they will invest. Having learned to be patient they will be biased towards the longer time frame. The contrarian will try to be early and will then look for the point in time when all the new money has arrived before he sells. He will correctly identify that point in time as when there is heightened optimism or maximum bullishness in the general population of people who could invest.

The super investor will try to second guess the market by understanding that the market movers are at different times more or less sophisticated. In a bear market rally it could be that there are very few NEW participants and the reversal time or bullish peak may be far more difficult to pick.

Barry may be thinking here that there is insufficient new money in the market to allow the experienced investors to cash out with winning hands. Hence the possibility of a longer delay and further pumping to pull in the inexperienced Johney come latelies before the inevitable dump.

Disclaimer. If I sound like I know what I’m talking about it is a complete coincidence.

Probably a good thing. Those radical “corn sweeteners” have been brutal to our diet.

Give me conservative, old-fashioned sugar anytime. ;)

interesting points