Posts filed under “Psychology”

Ariely: Our Buggy Moral Code

Behavioral economist Dan Ariely studies the bugs in our moral code: the hidden reasons we think it’s OK to cheat or steal (sometimes). Clever studies help make his point that we’re predictably irrational — and can be influenced in ways we can’t grasp.

 

Published on Apr 26, 2012

Category: Psychology, Weekend

Last month, I spilled a considerable number of pixels explaining why Rupert Murdoch’s Time Warner bid had no significance to whether or not this is a market top. My short list included complaints of cherry picked data that somehow ignored most of Murdoch’s M&A activity over the past half century; a laughably small sample size…Read More

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

The 2% Mindset

Perhaps this morning’s post on mediocrity makes this seem appropriate today:     Source: Trader Cabal

Category: Digital Media, Psychology

A Simple Strategy for Shaking Confirmation Bias

A Simple Strategy for Shaking Confirmation Bias Brett N. Steenbarger, Ph.D.     One of the most insidious cognitive biases affecting investors and traders is confirmation bias.  Once we hold a particular view, we tend to prefer processing information that fits with that view.  What’s worse is that, because of our bias blind spots, we…Read More

Category: Investing, Psychology

Beware those who are never, and can never be wrong.

Lately, I have been hear an interesting type of argument. It is a form of debate that is both disingenuous and dishonest. We will call this the “Can’t Lose Argument,” or CLA. Worse than confirmation bias, it is a money-losing exercise in narcissism. The CLA goes something like this: A data point will be mentioned,…Read More

Category: Psychology, Really, really bad calls

Cognitive Dissonance Is Hurting Your Returns

Regular readers know I enjoy discussing behavioral aspects of investing. The reasons for this are twofold: First, we can’t control the markets, but we can control our own reactions to it (at least we can try). And second, many studies have shown that investors suffer from a behavior gap between what they should garner in…Read More

Category: Cognitive Foibles, Investing, Psychology

Tales of the Death of Hedge Funds Have Been Greatly Exaggerated

During the past few months, we have posted a few words here on the quandary that is hedge funds. One such effort was titled “The Hedge-Fund Manager Dilemma,” and it explored the public’s fascination with the hedge-fund crowd. The next, “Why Investors Love Hedge Funds,” looked at why, despite stunning underperformance during the past decade,…Read More

Category: Hedge Funds, Investing, Psychology

Masters in Business: Rob Arnott of Research Affiliates

Rob Arnott turned the world of passive index investing upside down. Best known for creating “smart beta,” Arnott creates models weighted b y four factors: Sales, profits, book value and dividends. Market cap is not relevant to him. Funds running Arnott’s models manage about $200 billion dollars in smart-beta strategies. Assets have increased by 59…Read More

Category: Financial Press, Index/ETFs, Investing, Psychology

Nick Epley: Why You Should Talk to Strangers

Nicholas Epley is the John T. Keller Professor of Behavioral Science at the University of Chicago Booth School of Business. He was named a “professor to watch” by the Financial Times, is the winner of the 2008 Theoretical Innovation Prize from the Society for Personality and Social Psychology, and was awarded the 2011 Distinguished Scientific…Read More

Category: Psychology, Weekend

How to Change a Habit

Click for the ginormous version. Source: Charles Duhigg

Category: Digital Media, Psychology