Posts filed under “Cognitive Foibles”

Explaining the Explainers

One of the more fascinating aspects of watching finance is the never-ending stream of explanations for the market’s action. Strategists, news media and economists all engage in a series of tortured rationales for what just happened. These tend to be after-the-fact reasons that are too smug, too pat and too late to be useful, let alone satisfying.

Forget predicting the future, these folks don’t seem to even understand what happened yesterday.

All too often, they seem to be saying nothing more than “I don’t like that!” but lack either the awareness or courage to acknowledge the subtext of what they are saying or writing about.

To protect the not-so-innocent, I won’t point to specific examples.

It would be helpful if there were annotations to the commentary –sort of like VH1’s pop up videos (I’m showing my age). The insight into the authors’ psyche actually is much more valuable than the commentary itself.

Consider, for example, the countless analyses during the past six years about why the market is overvalued, or why it’s a tech bubble or why we’re about to experience  (choose one) a 1929/1987/2000/2008-like crash. It would have been a huge time saver if a popup explained:

“I missed the bottom and have been unable to find a good way to get into equities!”

It would be helpful if every time there is a complex merger or acquisition, analysts would simply admit that the accounting and tax benefits are somewhat beyond their expertise. “Maybe the deal is a money saver, maybe it isn’t, but in the 27 minutes since it was announced, I simply don’t know.” Of course, then they wouldn’t have a self-promoting reason to discuss it on television.


Continues here



Category: Cognitive Foibles, UnGuru

What March Madness Can Teach US About Investing & Trading

We are down to the Sweet 16 in the NCAA’s men’s college basketball tournament, otherwise known as March Madness, which depending upon your perspective is either the most exciting month in sports or the American collegiate plantation system writ large. As is my wont, I seek out lessons in what I see, hunting for parallels in sports, politics, et…Read More

Category: Apprenticed Investor, Cognitive Foibles, Investing

Gold Narrative Has Just Not Worked

Category: Cognitive Foibles, Gold & Precious Metals, Media, Really, really bad calls

Gold Turns Negative Year-to-Date; Stocks to Follow

Equity markets started off this year by falling. They rallied in February, working their way back into the green. The Standard & Poor’s 500 Index now is up about 1 percent for the year. Gold has traveled the opposite path: The yellow metal began at about $1,175 an ounce. By Jan. 23, it had rallied…Read More

Category: Cognitive Foibles, Gold & Precious Metals, Really, really bad calls, Trading

Anniversary of Crisis Lows Is a Psychology Reminder

Exactly six years ago today, the markets made their ultimate low following a 57% collapse of the S&P. I was fortunate to have been on the right side of that trade in both directions. What is most fascinating to me about that was the pushback from traders and investors — in each direction. It is revealing…Read More

Category: Cognitive Foibles, Investing, Markets, Psychology

Don’t Make the Trading Gods Laugh

Today’s discussion is aimed at the individual investor, though certainly the professionals might take something from our philosophical musings this morning. The bull market that dates to March 2009 is now entering one of its more interesting — and perhaps dangerous — phases. Not hazardous, mind you, from a market perspective, but from a behavioral…Read More

Category: Cognitive Foibles, Investing, Psychology, Really, really bad calls

Dilbert: Beating the Average

Source: Dilbert

Category: Bad Math, Cognitive Foibles, Humor, Investing

The Basic Simple Truths of Investing

For investors, it’s a perfect time to go back to the basics Barry Ritholtz Washington Post, December 21, 2014     Look around you: This is the time of year when the pages of newspapers and magazines are filled with predictions and lists and all manner of money-losing nonsense. I have pushed back against much…Read More

Category: Apprenticed Investor, Asset Allocation, Cognitive Foibles, Investing

NFP, Inflation & Conspiracy Theories

    Unbelievable jobs numbers..these Chicago guys will do anything..can’t debate so change numbers — Jack Welch (@jack_welch) October 5, 2012     Today’s column is about stupidity. Perhaps that’s overstating it; to be more precise, it is about the conspiracy-theorist combination of bias, innumeracy and laziness, with a pinch of arrogance thrown in for…Read More

Category: Bad Math, Cognitive Foibles, Data Analysis, Economy, Really, really bad calls

Once Again, the Gold Narrative Fails

Will they never learn? Yesterday, oil rallied 4.3 percent and gold gained 3.6 percent as commodities had an up day after a long and painful fall. The fascinating aspect of the trading wasn’t the $45 pop in gold, nor the even greater percentage rally in oil, but the accompanying narrative. (As of this writing, each…Read More

Category: Cognitive Foibles, Gold & Precious Metals, Psychology, Really, really bad calls