Posts filed under “Psychology”
Things to try in a market correction:
• Respond emotionally, giving in to your lizard brain. It does a good job of keeping you alive, so you might as well hand over management of your portfolio to it.
• Rely on your gut instinct to lead you out of trouble. After all, your instincts helped you buy gold at $400 and sell Apple at $700, right?
• Deviate from your plan, because really, what’s the point of having a plan if you can’t change it on a whim?
• Aggressively overtrade, because all of those capital gains taxes are helpful in reducing the federal deficit.
• Rely on the pundits’ market calls, because their sole interest is making sure you are comfortable in retirement.
• Flail aimlessly, and with any luck, something you do will turn out well.
• Hope is good. Hoping that things turn out for the best never did anyone any harm.
• Panic is always an option, because that always works out so well for people.
If you work in finance, you will invariably come across an example of single-variable analysis. Almost daily, we see terrible examples of this sort of analytic error, rife with logical weakness, yet offered with the highest degree of certainty. The way this works is as follows: Some ominous data point will be shown, along with…Read More
MTA Presentation: Risk, Trading & Neurofinance: “This Is Your Brain On Stocks” Click through for the free registration: MTA New York Chapter Meeting June 23, 2014 Featuring Barry Ritholtz presented by Bloomberg L.P. The New York Chapter of the MTA invites you to our next chapter meeting on Monday, June 23, 2014. We are…Read More
Jeff Saut dug into the archives for this one on Monday: “Money managers are unhappy because 70% of them are lagging the S&P 500 and see the end of another quarter approaching. Economists are unhappy because they do not know what to believe: this month’s forecast of a strong economy or last month’s forecast of…Read More
Today, let us briefly address sentiment – what it is, what it means and how to use it in your everyday trading. There is no piece of market data that is more misused, misunderstood or misapplied than sentiment. The spark for today’s diatribe was a State Street study of cash allocations in investment portfolios. The…Read More
Attention peasants: The Greubel Forsey GMT at $549,000 Source: Greubel Forsey I have been hearing a lot about the spending habits of the 0.01 percent lately. Perhaps, a little bit too much. Don’t worry, this isn’t going to be a class-warfare rant or a treatise on living the simpler, less materialistic life. Rather, it is…Read More
Click through for the free registration: MTA New York Chapter Meeting June 23, 2014 Featuring Barry Ritholtz presented by Bloomberg L.P. The New York Chapter of the MTA invites you to our next chapter meeting on Monday, June 23, 2014. We are honored to have Barry Ritholtz, founder and chief investment officer of Ritholtz…Read More
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…Read More