Posts filed under “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 one. Mr. Market will do what he is going to do, and that is unknown and unpredictable.

However, what isn’t unknown and is very predictable is that YOU are going to do something very foolish and self-destructive. The only variable is whether you are going to do this sooner rather than later.

A quick explanation.

The noise box in your den (and on the wall of your trading room) has been tallying a catalog of potential crises and hazards. That parade of terribles seems to be getting longer each day. Although none of them are new, it is as if all of them have suddenly risen in unison, a chorus of noise, funk and angst. Markets are expensive, the Federal Reserve’s stimulus of quantitative easing and zero interest rates is ending, the euro is collapsing, deflation is a threat, rates are rising, residential real estate is a mess, biotech is a bubble, oil prices are plunging, Grexit will arrive any day. Forty years of darkness! Earthquakes, volcanoes…The dead rising from the grave! Human sacrifice, dogs and cats living together…mass hysteria! 

Continues here

 

 

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

Empathy, Neurochemistry, and the Dramatic Arc

Narratives — specifically, the classic dramatic arc as outlined by German playwright Gustav Freytag — can evoke powerful responses, leading the brain to release the neurochemicals cortisol and oxytocin.

 

Paul Zak: Empathy, Neurochemistry, and the Dramatic Arc

 

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Category: Psychology, Science, Video

Choice Words on Behavioral Finance and Dick Fuld

Barry Ritholtz’s Choice Words on Behavioral Finance and Dick Fuld
 

The Bloomberg View columnist and investment blogger talks behavioral biases to avoid and how Lehman Brothers committed suicide (LOL Is it me, or do I look weird?)
 

 

Category: Psychology, Video

The Amazing Disconnect Between Hedge Fund Performance & AUM

Earlier this week, Greg Zuckerman of the Wall Street Journal pointed out one of the great mysteries of today’s investment landscape: Despite underperforming by a substantial margin, hedge funds keep attracting more investors and assets under management. It is almost as if (to borrow the headline on Zuckerman’s article), “Hedge Funds Keep Winning Despite Losing.”…Read More

Category: Asset Allocation, Bad Math, Hedge Funds, Investing, Psychology

Uh-Oh: BusinessWeek Cover Story Nationalism

Now I am engaging in full on selective perception:     Source: BusinessWeek

Category: Contrary Indicators, Financial Press, Media, Psychology, War/Defense

Would you pay $100 million dollars for this Grilled Cheese Food Truck?

If you have been a regular reader of mine, you are probably familiar with several things about me: First, you know I have been a steadfast bull during the entire rise in the stock market. It isn’t that I am such a genius or especially lucky. I just would rather not guess when the bull…Read More

Category: Contrary Indicators, Psychology, Valuation

Both Sides of the Brain (Updated)

Source: Dr. C Daniels ~~~ UPDATE: 1/25/15 Here is the latest scientific thinking, countering the older “left right” analysis:

Category: Psychology, Science

The Where-To-Be-Born Index

Source: The Economist

Category: Data Analysis, Economy, Psychology, Taxes and Policy

Josh Brown: Investment Fads and Themes, 1996-2014

Another year in the books and I’ve updated my Investing Fads and Themes by Year guide accordingly. It begins with 1996 because that was my first summer working on The Street and my earliest exposure to the market. I do this every December because I agree with the eminent philosopher Bob Marley in that “If you know your history,…Read More

Category: Investing, Psychology, Really, really bad calls

Generational Divide

Source: WSJ

Category: Psychology