The A to Z of Behavioral Bias
The A to Z of Behavioral Bias The A to Z of Behavioral Bias is (surprise, surprise!) an A to Z list of common behavioral biases with brief descriptions, examples, causes, possible mitigations and suggested further reading. This isn’t intended to be a comprehensive list of biases – The Big List of Behavioral Biases […]
Age Makes You Happier – And Poorer
Age Makes You Happier – And Poorer Avoidance Strategies As the years pass I’ve noticed I’m increasingly unwilling to expose myself to sources of negative information or emotional stress. So news bulletins, soap operas and anything a film critic might regard as emotionally engaging are increasingly off-limits. Frankly I’d rather watch Guardians of the […]
Be Humble, Become Wealthy
Be Humble, Become Wealthy Thrusting, Decisive and Frequently Wrong We are both by design and by culture inclined to be anything but humble in our approach to investing. We usually invest on the basis that we’re certain that we’ve picked winners, we sell in the certainty that we can re-invest our capital to […]
Z is for Zero Risk Bias
Z is for Zero Risk Bias Zero-risk bias is a preference for options that completely eliminate some risk even where alternative, often cheaper, options will reduce the overall risk by more, proportionately.We often prefer the absolute certainty of a smaller benefit to a larger benefit of less certainty.Let’s rewind to 2007/2008 when the world, […]
The Cherry Coke Effect?
The Cherry Coke Effect? Hunger Games If you want a favorable decision from a judge pray that you get a hearing early in the day or straight after lunch. In similar fashion you shouldn’t be making investment decisions on an empty stomach. In the parlance, such arbiters of justice and seekers after profit […]
The Secret of a Healthy, Wealthy Life
The Secret of a Healthy, Wealthy Life Infantile People People, we know, generally aren’t very good with money. They don’t save enough, are inclined to procrastinate over saving for the distant future and are easily induced to splash out for instant gratification using the plastic. All of which has led psychologists and governments to […]
De Tocqueville: Trust in Self-Interest
De Tocqueville: Trust in Self-Interest And I assure you that all the peoples and populations who are subject to his rule are perfectly willing to accept these papers in payment, since wherever they go they pay in the same currency, whether for goods or for pearls or precious stones or gold or silver. […]
James Randi and the Seer-Sucker Illusion
James Randi and the Seer-Sucker Illusion Illusion is not Forecasting Every morning before he left home the illusionist James Randi used to take a piece of paper and write on it “I James Randi will die today”. He’d then sign and date it and slip it in the pocket of his jacket. Had he […]
Complexity in Financial Systems
Complexity in Financial Systems What’s Complexity?We can probably all agree that modern day financial systems are complex, but what that actually means isn’t something that everyone agrees on. Typically, though, a system characterised by complexity isn’t something that anyone’s designed – it emerges, it adapts spontaneously and it produces stunningly unexpected outcomes when no […]
Irrational Numbers: Price Clustering & Stop Losses
Irrational Numbers: Price Clustering & Stop Losses Universal Number Theory One of the odder things about the universe is that the small set of numbers that define its structure, the so-called universal constants, don’t seem to have any structure of their own. You’d have thought that whatever immortal deity breathed life into the whole […]