Posts filed under “Psychology”

A Bear Market for Mom & Pop Investors

Last year, we noted that there was a “Bubble in Bubble Calling.” News media bubble chatter was the rage, whether it was tech initial public offerings or stocks or bonds — all caused by “a global central bank QE bubble.”

Here we are two quarters later, with the central bank reducing quantitative easing by scaling backs it asset purchases. Markets have reached new highs, which is a highly bullish sign. The jobs lost in the great recession have been recovered, and economic data continues to trend positive.

Despite this, we still hear bubble chatter. Yet when we look at what individuals are doing with their investments, their behavior is definitely bearish. According to a study published in the Financial Analysts Journal, equity ownership has fallen to the lowest level in more than a half-century. In 2012, investors held a mere 37.7 percent of their portfolios in equities. That was out of a grand total of $90.6 trillion in investable assets around the world.

Over the past three decades, investors’ portfolio equity exposure has run at a historical average of about 60 percent. Think of this as the classic 60/40 stock-bond allocation.  continues here

Category: Investing, Markets, Psychology, Sentiment

How Much is a Tulip Worth

Category: Psychology, Think Tank, Trading

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 is it going to take to kill this species off?

Why do we pay attention to the most dire of forecasts? I pulled this from a 2011 piece I wrote: “You humans are a hardy breed. No matter how dire the circumstance, your species has managed to prosper. You survived the Ice Age, the Dark Ages, the Middle Ages, the Age of Aquarius (as well…Read More

Category: Humor, Investing, Psychology

What ‘This Time It’s Different’ Really Means

Investors must recognize what ‘this time it’s different’ really means Barry Ritholtz, Washington Post May 18, 2014     “The four most expensive words in investing are: ‘This time it’s different.’” So said Sir John Templeton, the legendary investor and mutual fund pioneer. The phrase contains tremendous wisdom, but only if you truly understand what…Read More

Category: Apprenticed Investor, Investing, Psychology

Behavioral Test: What Are the World’s Deadliest Animals?

Source: Gates Notes   Continues here  

Category: Digital Media, Psychology, Science

You Don’t Understand Risk.

You don’t understand risk. I don’t mean you, in your professional capacity. I mean you, the human being whose brain is desperately trying to keep you alive. An endless procession of mortal threats are trying to end your particular genomic variation, forcing your brain to respond first and think later. Your existence is threatened by…Read More

Category: Investing, Psychology

When is ‘this time’ really different?

    My Sunday Washington Post Business Section column is out. This morning, we look at a famous aphorism from Sir John Templeton. The print version has the hedder When is ‘this time’ really different? while the online version used the fuller Investors must recognize what ‘this time it’s different’ really means. The column tries…Read More

Category: Apprenticed Investor, Psychology, Quantitative

Preview: What Does “This Time Is Different” Really Mean?

This is a preview of an upcoming column.     “The four most dangerous words in investing are: ‘this time it’s different.’ “  -Sir John Templeton What do these words actually mean to investors today? As of late, more than a few pundits have been misinterpreting their meaning. With a wave of a hand, they…Read More

Category: Investing, Psychology, Valuation

Do You See the Positives or Negatives?

The Standard & Poor’s 500 Index hit an all-time high yesterday, closing at 1,897.45. The Dow Jones Industrial Average also hit a record, ending at 16,715.44. This should be tempered by noting that the Dow is up less than 1 percent so far this year, while the S&P 500 has gained about 2.7 percent. One…Read More

Category: Data Analysis, Earnings, Psychology, Sentiment, Valuation