Posts filed under “Cognitive Foibles”

Be Wrong Like Ray Dalio

In yesterday’s column, I wrote:

If you have an issue with Social Security, then fix it. The regressive taxes to fund retirement benefits top out at about $117,000 in 2014. Why not simply raise that to $250,000 next year and $500,000 during the next 20 years. Congratulations, you just made Social Security solvent for the next century.

I was incorrect. Several sharp-eyed readers pointed out those numbers didn’t add up. That sent me back to a research report I was basing this on, and as it was, I had incorrectly read the data, conflating raising the cap with removing it entirely. As the Congressional Budget Office numbers show, making incomes up to $500,000 subject to the payroll-tax wouldn’t get the job done. Indeed, removing the cap would only cover about nine-tenths of the projected Social Security shortfall in the coming decades.

Any opportunity to correct myself when I make an error is an opportunity that is always appreciated. It happens to everyone all the time. But as Bridgewater Associate’s Ray Dalio has so eloquently argued, it is much better to own up to a mistake, rather than pretend it never happened, or simply hope no one notices or mentions it again in public. Bridgewater, the world’s largest hedge fund, makes this a key part of it culture and process. Some people deem this self-reflection cultish; it has also led to one of the most enviable long-term track records in investing.

Continues here

Category: Cognitive Foibles, Corporate Management, Hedge Funds, Psychology

NorCal FPA: This Is Your Brain On Stocks

This is the presentation I gave this week out in San Francisco:

Category: Cognitive Foibles, Investing, Psychology, Think Tank

What You’re Hearing Is Noise

In a new project at Bloomberg I will interview some of Wall Street’s most influential thinkers. I’ll share more details with readers when we get closer to a launch date, but several consistent themes have become clear to me, even at this early stage. The one I want to discuss this morning is the concept…Read More

Category: Apprenticed Investor, Cognitive Foibles, Financial Press, Investing

Once Again, The Narrative Fails

Late last year, we had a wholesaler from a major ETF firm in our office. At the time, the chatter was all about the upcoming Alibaba IPO. It was going to be (in his words) “huge, disruptive, incredibly powerful – and you cannot get any.” Never mind that IPO returns are on average mediocre or…Read More

Category: Cognitive Foibles, Investing, IPOs

Radiolab: Memory and Forgetting

This hour of Radiolab, a look behind the curtain of how memories are made…and forgotten.

Remembering is an unstable and profoundly unreliable process–it’s easy come, easy go as we learn how true memories can be obliterated, and false ones added. And Oliver Sacks joins us to tell the story of an amnesiac whose love for his wife and music transcend his 7-second memory

SOURCE: WNYC

Category: Cognitive Foibles, Psychology, Science, Video

Greg Harmon: We Are All Useless Morons that Suck

Let’s face it you suck at investing. Your adviser sucks at investing too. If you had picked the best stock to buy every day you could have turned $1000 into $264 billion by mid December. That is a 26.4 billion percent return. Did you even get a 1 billion percent return? How about 1 million…Read More

Category: Cognitive Foibles, Psychology, Think Tank, Trading

Am I Too Bullish?

Over the past few weeks, I have been trying to push back against the usual contingent of bears. In particular, I have argued that this bull cycle is not yet over, markets are not in bubble and that people have been sitting for too long in way too much cash. John Coumarianos of the Institutional…Read More

Category: Apprenticed Investor, Cognitive Foibles, Investing, Sentiment

Change Blindness

Psychologists who study the fascinating phenomenon of change blindness know that merely looking at something is not the same as actively paying attention to it. As the demonstration in this video shows, people can be blind to significant changes in a visual scene that are obvious to someone who expects that these changes are going to happen

Originally posted at NOVA

Category: Cognitive Foibles, Video

Personal Finance for Engineers (Twitter, 2013)

This is an updated version of my talk “Personal Finance for Engineers” given at Twitter HQ in San Francisco on October 9, 2013. Personal Finance for Engineers (Twitter, 2013) from adamnash Oct 09, 2013

Category: Cognitive Foibles, Investing

Critical Thinking

A look at some of the principles of critical thinking.

Category: Cognitive Foibles, Video