Posts filed under “Apprenticed Investor”

“Facts Plain to Any Dispassionate Eye”

Funny how these things work: In a rant Friday morning, I wrote:

“Regular readers know that I despise political parties, believe partisans suffer brain damage — literally, they have the same cognitive deficits that ardent sports fans suffer. I have trashed both Bush and Obama, but moved to a bullish posture when despite either’s incompetence, they accidentally did something that caused a bullish set of factors to predominate.”

Later that same day, an emailer pointed me to an article at Smart Money looking at a similar phenomenon: Do our cognitive errors affect even our most fundamental perceptions of reality?

A new study in the journal Psychological Science offers compelling evidence that the answer is yes:

“In their paper, “Wishful Seeing,” Emily Balcetis of New York University and David Dunning of Cornell report the results of their research showing that people are not only biased in their reasoning but are actually biased in their visual perception — literally, how they see the world.

In a clever series of experiments, Balcetis and Dunning show that people reliably misperceive how far away an object is based on how much they desire it. That is, more desirable objects appear closer. In one study, the researchers had people sit across the table from a full bottle of water and then had them either eat pretzels or drink water from an eight-ounce glass. After being shown a one-inch line as a reference, the participants were then asked to estimate how many inches separated them from the bottle of water. Consistently, the thirsty participants perceived the water bottle as being closer than did the quenched participants.”

Fascinating stuff.

And it is more proof as to why you don’t want to become infected with bad ideas, poor analysis or bias from various quarters.

>

Sources:
Do You See What I See?
Ryan Sager
SmartMoney.com, January 22, 2010
http://www.smartmoney.com/investing/economy/do-you-see-what-i-see/

Wishful Seeing: More Desired Objects Are Seen as Closer
Emily Balcetis and David Dunning
Psychological Science, 17 December 2009
http://pss.sagepub.com/content/early/2009/12/16/0956797609356283
(DOI: 10.1177/0956797609356283)

Category: Apprenticed Investor, Psychology

Lessons from Merrill Lynch

While I am not a fan of most big firm fundamental analysts, over the years, Merrill Lynch has had some sharp guys in their Chief Strategist/Economist positions. Here are some lessons and rules from 3 of them. Richard Bernstein was “notoriously cautious on stocks for much of this decade” — and was very bearish on…Read More

Category: Apprenticed Investor, Investing, Markets, Rules

2009 Investing Mea Culpas

With 2010 underway, its important to look back at the year gone by to assess — what was done correctly can take care of its self, but the areas that need improvement require active intervention. All told, 2009 was a year rife with both risk and opportunity. If you avoided the risk and took advantage…Read More

Category: Apprenticed Investor, Investing

Ten Lessons (Not?) Learnt

When he was at Societe  Generale, I very much enjoyed the work of James Montier. He is now working with Jeremy Grantham at GMO. I have two of James’ books in my queue, Behavioural Finance: Insights into Irrational Minds and Markets (2002) and Behavioural Investing: A Practitioners Guide to Applying Behavioural Finance (2007). He hasn’t…Read More

Category: Apprenticed Investor, Investing, Markets, Valuation

Bailout Nation Reviews (So Far)

Here are the full run of reviews of the book:

Mainstream Media Reviews

New York Times:
Rescues Unlimited: Government as Wall Street’s Enabler
By DEVIN LEONARD
NYT, August 2, 2009

http://www.nytimes.com/2009/08/02/business/economy/02shelf.html

Wall Street Journal:
… And Dave Has His Book List
DAVE KANSAS
WSJ, July 26, 2009

http://online.wsj.com/article/SB124856712152681467.html

Bloomberg
Greenspan Flunks Test, Bush Falls Into $15 Trillion Pit: Books
Review by James Pressley
Bloomberg, May 27 2009

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amoZezYyYwFA

Forbes:
Book Review: Rescue Fatigue
Michael Maiello, 07.16.09, 12:01 AM EDT
Barry Ritholtz’s ”Bailout Nation.”

http://www.forbes.com/2009/07/15/bailout-nation-aig-chrysler-opinions-book-review-barry-ritholtz.html

Asia Times
Named and shamed
Reviewed by Muhammad Cohen

http://www.atimes.com/atimes/Global_Economy/KJ03Dj01.html

Marketwatch:
The roots of ‘Bailout Nation’
Commentary: Ritholtz book dissects crisis and Greenspan
By Howard Gold

http://www.marketwatch.com/story/ritholtz-gets-to-the-roots-of-bailout-nation-2009-08-04

Reuters
Bailout study widens the “Big Picture”
Thu Jun 11, 2009 3:47pm EDT
By Pedro Nicolaci da Costa

http://www.reuters.com/article/ousiv/idUSTRE55A6CK20090611

Miami Herald
Economics stories can be unexciting, but recent books try to keep their readers awake.
RICHARD PACHTER
Miami Herald, Monday, 06.01.09

HTTP://WWW.MIAMIHERALD.COM/BUSINESS/STORY/1074231.HTML

Las Vegas Business Press
Big bailouts a perversion of capitalism, author argues
MATTHEW CROWLEY
October 05, 2009

http://www.lvbusinesspress.com/articles/2009/10/05/news/iq_31501104.txt

The Hindu
Faux capitalists look for the free lunch
D. Murali
September 19, 2009

http://beta.thehindu.com/business/article22388.ece

ABC News
‘Self-Inflicted Damage’: Highlights From ‘Bailout Nation’
New Book From Bailout Critic Barry Ritholtz Takes on Citigroup, Chrysler and More
ALICE GOMSTYN
ABC NEWS Business Unit, May 27, 2009

http://abcnews.go.com/Business/Economy/story?id=7681437&page=1

See also First Amendment Award for Outstanding Journalism: Best Book Bailout Nation

Blog Reviews:
Read More

Category: Apprenticed Investor, Bailout Nation, Books

Interview with a Financial Blogger

I did this interview with a financial site some time ago — Its as good a time to post it as any.

~~~

How long have you been blogging?

About 5 or 10 years, depending upon your definition.

From a weekly email, I eventually moved to Geocities around 1998. That was kinda blog-like. I started “blogging proper” over the Summer of 2003 – I was a beta tester for Typepad. In late 2008, I moved to my own domain (Ritholtz.com) and Word Press.

What got your started blogging?

Its kinda funny – I originally wanted to access my most recent version of written work. Between the office and laptop and house, I always seemed to have an older version of whatever I was working on. It also find it a convenient way to track/bookmark certain pages and articles.

I was very much surprised when an audience showed up.

What is the focus of your blog, i.e. how does it set you apart from the other bloggers out there?

My focus is whatever interests me. I mean that quite literally – if I find it intriguing, it ends up on the blog. So while there is a lot of sophisticated, high level analysis and commentary, I also drop in lots of asides about cars, movies, music, gadgets, concerts, etc.

I think the combination of markets, economics, investing, and technology is what appeals to people — then the personal stuff lets them get to know me.

Its not a conscious marketing thing . . . I merely scratch whatever is itching.

Read More

Category: Apprenticed Investor, Media, Weblogs

Wait a Second, Monkey Boy . . .

I did a long video interview with Steve Forbes — it should be posted later this week. Meanwhile, this is part of the pre-interview I did prior to that shoot: What is the greatest financial lesson you’ve ever learned? You’re a monkey. It all comes down to that. You are a slightly clever, pants-wearing primate….Read More

Category: Apprenticed Investor, Bailouts, Media

Bloomberg Surveillance Appearance

Here is yesterday’s slot on Bloomberg radio: click for iTunes audio: > The Bloomberg web version should be posted (eventually)

Category: Apprenticed Investor, Media, Psychology

Quote of the Day: On Markets

A friend I used to work with who buys distressed debt/CDOs emails me this: I don’t remember when you had this on your site, but it caught my eye. I printed it and hung on my computer screen. I read it once a day. It restores in me faith that my perseverance, honesty and respectful…Read More

Category: Apprenticed Investor, Markets, Psychology

Investing via Media Market Timing

Yesterday, I discussed why the Barrons vs Cramer debate was irrelevant, and why people should never invest based on what they watch on TV. A number of commentors observed that despite the many exhortations to think of television as merely entertainment, many a fool are still watching Mad Money for investing insights. When I wrote…Read More

Category: Apprenticed Investor, Financial Press, Markets