Be Humble, Become Wealthy
PsyFi Search Wednesday, 10 September 2014 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 […]
Happy People Make Terrible Traders
PsyFi Search Thursday 24 May 2012 Happy People Make Terrible Traders Happiness causes over-optimism which causes over-trading. Repeat until crash occurs. Optimistic Fools People who are happy are more confident and expect to make more money by trading, and anticipate taking lower risks in doing so. This result ought to be enough to depress most […]
Dirty Money: There IS Accounting For Taste
PsyFi Search Tuesday 29 May 2012 Dirty Money: There IS Accounting For Taste Unfungible People The link between emotions and decision making, particularly financial decision making, has been recognized for years. This is a tricky area because the connection between emotions and rationality is difficult to unpick, which is why making investment decisions while in […]
Backfiring Investment Theories
PsyFi Search Thursday 9 February 2012 Backfiring Investment Theories Holy Theory We’ve met the nasty nature of confirmation bias on several occasions. This is the twisted trait that sees us in thrall to the views of others around us, and helps us encourage them to maintain those views, regardless of anything resembling reality. But this […]
Love Your Kids, Not Your Stocks
PsyFi Search Wednesday, 15 December 2010 Love Your Kids, Not Your Stocks That Love ThingPsychologists have about as many theories about love as economists have about investing, and they have about the same success in making predictions based on their ideas. Still, both sets of social scientists plod on regardless, presumably on the basis that […]
Risk, Stone Age Economics and the Affect Heuristic
PsyFi Search Wednesday 26 May 2010 Risk, Stone Age Economics and the Affect Heuristic Real Risk ManagementMeet Grunt, a Stone Age economist. Grunt spends his time assessing risks. Usually these involve delicate decisions that may end up having quite important consequences – like whether he’s alive at the end of the day or not. Whether […]
Value in Mean Reversion?
PsyFi Search Saturday, 13 March 2010 Value in Mean Reversion? Many shall be restored that are now fallen; and many shall fall that are now in honour (Horace, Ars Poetica)From Horace to Graham and DoddsvilleThe quote above is now a couple of thousand years old but was used by Ben Graham and David Dodds in […]
Get An Emotional Margin of Safety
PsyFi Search Monday 24 August 2009 Get An Emotional Margin of Safety Businesslike InvestmentWarren Buffett states, quite frequently, that the most important investment statement ever made was that of his mentor, the father of value investing, Ben Graham: “Investment is at its most intelligent when it is most businesslike” Now if you’ve ever wondered exactly […]
The Psychology of Scams
PsyFi Search Tuesday, 19 May 2009 The Psychology of Scams Gullible Brits, Smart ScammersThe UK’s Office of Fair Trading (OFT), an arm of government concerned with stopping consumers being ripped off, has just published a study into The Psychology of Scams looking at why 3.2 million adult Brits manage to lose £3.5 billon ($5.4 billion) […]
The Media, Fear and Stockmarket Manias
PsyFi Search Friday 3 April 2009 The Media, Fear and Stockmarket Manias Breast CancerIf I were to ask you at what age are women most at risk from breast cancer, what would you answer? Write down what you think. Or, at least remember carefully. We don’t trust our memories around here.I’ll come back to that […]