Practical analysis for investment professionals

behavioral biases


Weekend Reads for Finance Pros: China, Retirement, and Investing Mistakes

This week’s roundup of interesting bits of news and analysis comes to you via Hong Kong, where all eyes (and ears) were on the opening of China’s annual session of parliament. One of the top stories to emerge was… READ MORE ›

Weekend Reads for Investors: The Super Bowl Indicator

This weekend approximately half of US households will be watching the Denver Broncos and Seattle Seahawks compete in the 48th edition of the National Football League’s Super Bowl. It is typically a time when stock market observers cast seriousness aside and consider what the game’s outcome will mean for equity prices by examining the Super Bowl Indicator. First proposed in 1978, this theory holds that stocks will rise in the coming year if an original NFL franchise wins, but will fall if an old AFL team wins.

Poll: What Poses the Greatest Risk for Financial Markets?

With the heady returns delivered by most major financial markets in 2013 in the rear view mirror, investors are now tasked with worrying about what could go wrong in the year ahead. A plurality of respondents to our global poll, 36%, cited political or geo-political risks (including government stasis or military conflict) as the greatest threats to market stability, sentiment almost certainly influenced by chronic political dysfunction in Washington, D.C., ongoing unrest in the Middle East, and growing tensions in Asia Pacific.

Weekend Reads for Advisers: Our Brains, Psychopaths, and (Failed) Resolutions

Back in my fomer life, I was a reporter and editor at the Financial Times, where, for a time, I edited James Altucher’s regular FT column. His musings were often irreverent and amusing and, needless to say, attracted a… READ MORE ›

Best of 2013: Know Yourself (and How You Make Decisions)

As I looked back over a year of tweets and blog posts, one theme was perennial: we cannot escape ourselves. What do I mean by that? Behavioral biases inform our investment decisions, regardless of gender, season, or geography.

Weekend Reads for Advisers: Psychophaths, Bubbles, and Black Holes

If you are a regular reader of these posts, you won't be surprised by this week's headline and range of articles. But if this is your first time, and you're wondering what psychopaths, bubbles, and black holes have to do with being a professional investor and/or financial adviser, the answer is simple: "Investing demands that you be a polymath — knowing a lot about many things (including nonfinancial topics) and how those things interconnect into an organic whole."

Nobel Prize a Nod to Our Murky Understanding of Markets

The contrasts among the work of the three men who won this year's Nobel Prize in economics highlights the murky, unresolved nature of our knowledge about how markets function. Nevertheless, the prize committee seems to have recognized that even conflicting theories can both be right, if only at points in time.

Weekend Reads for Advisers: Investing, Poker, and Retirement

This week I heard something that really stuck with me: "Follow your ignorance." It's a phrase that my colleague, Jason Voss, CFA, likes to use, and it's a mantra we all should adopt. Said another way, it could be: "Follow your curiosity."

Weekend Reads for Advisers: Emerging Markets, Meditation, and Monetary Policy

I don't know about you, but to me it seems as if summer flew by. Here in the United States, Labor Day — the symbolic end of summer — is just around the corner. With that in mind, I thought I'd do something a little different this week: before I recap some of the most interesting content I've come across recently, here's an ode to summer.

Poll: What is the Primary Cause of Speculative Investment Bubbles?

Nearly 38% of global respondents to this week’s poll think the behavioral biases of investors are the primary cause of investment bubbles, while 33% of those polled believe responsibility lies with central banks and their easy money policies. Excessive leverage (19%) and government policies (7%) were less favored responses.



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