Posts filed under “Psychology”

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 big down day can erase all gains for the year.

The small-cap Russell 2000 Index has been playing the spoiler, failing to reach new highs. Perhaps this is less surprising, after last years’ blistering 38 percent gain for the Russell, and 43 percent run-up for its growth index. No one expects new records anytime soon from the Nasdaq Composite Index. It is up about fourfold from its 2002 low, but still is almost 20 percent below its peak more than 14 years ago.

Each new set of highs seems to be greeted with derision and skepticism. The evidence shows that new highs are bullish, but that seems not to matter very much to the skeptics. The U.S. economy is the cleanest shirt in the dirty hamper. Year-over-year increases in corporate revenues and better-than-expected earnings should also give investors a reasonable basis for anticipating equity gains.

This morning, I want to take a quick look at what is bullish and bearish for stock markets.   continues here

 

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

>   My Sunday Washington Post Business Section column is out. This morning, we look at the motivations of various market commentators. The study of investor bias and psychology has long fascinated me. This column revisits the subject of different roles investors must play in order to confront these problems. I tangentially mentioned this in…Read More

Category: Apprenticed Investor, Financial Press, Investing, Psychology

Amateurs versus Professionals

AMATEURS Have tons of ideas, are excited about all of them and see none to fruition. PROFESSIONALS Have tons of ideas, pick one and do their best to make it happen. AMATEURS Think they can do everything. PROFESSIONALS Know it’s almost impossible to achieve one thing. AMATEURS Think they know everything. PROFESSIONALS Are always learning….Read More

Category: Psychology, Think Tank

Spec-Tech Crash Is a Good Thing

Today, I hope to explain how the crash of the speculative tech names is a positive. Last month, we noted that “High-Flying Tech Stocks Were Coming Back to Earth.” Some of the companies we reviewed then included Twitter Inc., LinkedIn Corp., Netflix Inc., Tesla Motors Inc., Priceline Group Inc., Google Inc. and Facebook Inc. Since…Read More

Category: Investing, Psychology, Technology, Valuation

U.S. Money Managers Are Cautiously Optimistic

From Barron’s big money poll; The mix of neutral and bearish managers at 44% seems high — I’d love to see that plotted over a long period on a chart.   Source: Barron’s

Category: Investing, Psychology, Sentiment

It’s a Tech Bubble! Unless You Care About Earnings and Valuations

Earlier this week, Greenlight Capital hedge fund manager David Einhorn reignited the bubble debate that we have spilled so many pixels dissecting. The shorter of Lehman Brothers and the New York Mets fan said in a quarterly letter to clients “we are witnessing our second tech bubble in 15 years.” The Bubble Chatter is nothing…Read More

Category: Hedge Funds, Psychology, Short Selling, Valuation

Behavioral Investing/Economics Blogs?

  I am working on a new project, and I wanted to know what your favorite blogs or resources are for Behavioral Economics, Neuro-Science, and the Psychology of investing. Thoughts? Post a comment, or email me at TheBigPicture at Optonline dot net   Here are a few I have been checking out lately: The Psy-Fi…Read More

Category: Psychology, Weblogs

The Rich Buy Real Estate; The Poor Want Gold

If you want to know what someone’s views of society are, ask what they believe is the best long-term investment. I am fascinated each year when Gallup Poll asks Americans to choose the best option among real estate, stocks and mutual funds, gold, savings accounts and CDs, or bonds. The results are a pop psychologist’s…Read More

Category: Gold & Precious Metals, Investing, Psychology, Real Estate

The Cognitive Side of Hedge Fund Investing

Larry Swedroe, research director for BAM Advisor Services LLC, noted earlier this month that total hedge fund assets under management, or AUM, reached $2.63 trillion. This represents a sizable increase, despite fund performance generously described as lackluster. The increase in assets under management led to some interesting discussions. Lots of readers had e-mailed me with…Read More

Category: Hedge Funds, Investing, Psychology

Chasing Returns Has a High Cost for Investors

Chasing Returns Has a High Cost for Investors By YiLi Chien, Senior Economist St. Louis Fed 04/14/14       The investment behavior of households could be influenced by their own past experience, especially by the return performance of their portfolios.  We can see this through U.S. equity mutual fund flows being positively correlated with…Read More

Category: Investing, Psychology, Think Tank