Posts filed under “Psychology”
Ever say something that you know might be taken out of context, but you say it anyway?
Today, once or twice during the day, I commented that the market’s immediate reaction to one of these "events" is a mathematical function of body count. The capital market response to the London bombing will be less than Madrid, which was less than New York (9/11).
That seems some what clinically dispassionate, and it is so by design. Indeed, following this morning’s first post, an emailer gently chided me for my lack of compassion.
Please do not confuse objectivity with lack of passion. For those of you who may be new to the site, if you are unfamiliar with my history, thn its time to bone up: If you have some time to kill, brew a cup of Joe and have a read of this:
I am only capable of being objective — of having the alien investor
perspective, of being unemotional — because I have been through the
From R. Douglas Van Eaton, CFA, professor of finance in the
College of Business Administration at the University of North Texas, discusses common investor errors:
Fear of regret/pain of regret
Myopic risk aversion
Van Eaton notes" A better understanding of the psychology of investor mistakes can
reduce their effects on investment decisions. Here is a list of the
most common psychological effects, and how you can reduce their impact
and incorporate them into your own investment decisions."
The full piece is below.
The Psychology Behind Common Investor Mistakes
R. Douglas Van Eaton