Posts filed under “Apprenticed Investor”

Brain Oddities: Spelling is Irrelevant to Comprehension

In trying to make sense of the world around us, our brains have evolved to do some very odd things. The more we learn about our cognitive processes, the more it seems we have inherited a very weird wetware set, filled with bizarre and misleading foibles.

While most of the cognitive errors I reference here work against us — especially as investors — today’s example of a cognitive process works strangely in the brain’s favorSpelling don’t matter. Comprehension remains essentially unchanged, even when all letters of a word are totally mixed up — just so long as the first and last letters are in their proper place.

Spelling, it seems, is irrelevant to comprehension. Try this jumble below and see if the flawed wetware you call a brain can read it:

>

>

Pretty cool, eh? Quite a marvelous set of neurons you got there . . .

Category: Apprenticed Investor, Psychology

Investing Losses: Death by Opinion

Chart via No Brainer Trades > No Brainer Trades brought the above chart to my attention, and its worth spending some time detailing. “I heard this guy on CNBC . . . well, his opinion is . . . his trades are . . .” As the chart suggests, these turn out to be amongst…Read More

Category: Apprenticed Investor, Psychology, Trading

Focus on the Next Crisis — Not the Last One . . .

“You still have an investment culture that’s still too heavily steeped in the most recent experience rather than rationally basing it on the evidence of the day. We had such a terrible crisis of ‘08,’ it’s not surprising to me that the first slowdown of the recovery brought back deflation-depression mentalities with vengeance.” -James Paulsen,…Read More

Category: Apprenticed Investor, Investing, Psychology

Might “Fiduciary Standard” = A Blow to CEFs?

There’s still great uncertainty about what direction financial regulation is going to take, particularly in view of Republicans’ newfound control of the House of Representatives.  Back in July, headlines like this one, trumpeting replacing a “suitability” standard with a fiduciary standard, were a dime a dozen.  (I won’t go into the differences between the two…Read More

Category: Apprenticed Investor, Investing, Legal, Regulation

Percentage of Stocks Over an Index’ Moving Average as an Oscillator

I was discussing with a group of traders the other day how to use various oscillators with a moving average. Percentage of NYSE stocks over the 200 day MA, percent of SPX stocks over 50 day, etc. Someone complained that when they didn’t have access to their Bloomberg terminal, they could not pull up those…Read More

Category: Apprenticed Investor, Technical Analysis

Politics and Selective Perception

Source: Red State > A friend writes: “What do you do when presented with a chart such as the one above?” My answer was simply that it depended upon who is showing you the chart: • If it comes from a hard core partisan, you laugh at the flaws in their wetware and say nothing….Read More

Category: Apprenticed Investor, Data Analysis, Employment, Politics, Psychology, Really, really bad calls

Investor Advisors: Buy High, Sell Low

Jason Zweig has an interesting piece in the Saturday WSJ about the bad advice investment advisors give: “Investment professionals are supposed to exercise independent judgment; in Warren Buffett’s words, they should be fearful when others are greedy and be greedy only when others are fearful. It doesn’t always work that way. Corporate pension funds had…Read More

Category: Apprenticed Investor, Investing, Really, really bad calls

15 Inviolable Rules for Dealing with Wall Street

The never ending parade of stock scandals seems to continue unabated, the stock lending scam being only the most recent. As history has shown us — from Mexico to Orange County to analyst banking crisis to Derivatives to etc., when the Street comes aknockin, best for you to hide your wallets. For reasons we are…Read More

Category: Apprenticed Investor, Corporate Management, Investing, Really, really bad calls, Rules

Do You Wanna Be Right, or Do You Wanna Make Money?

My inbox is deluged with rants and demands from people who are insisting that This. Rally. Must. End. NOW! A composite of their emails would read something like this: “How can you sit there so blithely while the Fed debases the world’s reserve currency? Why haven’t you commented on POMO?!? The entire game is rigged,…Read More

Category: Apprenticed Investor, Investing, Markets, Psychology, Really, really bad calls, Trading

Six Rules of Michael Steinhardt

Michael Steinhardt was one of the most successful hedge fund managers of all time. A dollar invested with Steinhardt Partners LP in 1967 was worth $481 when Steinhardt retired in 1995. The following six rules were pulled out from a speech he gave: 1. Make all your mistakes early in life: The more tough lessons…Read More

Category: Apprenticed Investor, Investing, Rules