I recently read Jim O’Shaughnessy’s What Works on Wall Street for the first time. This is undoubtedly a book that I’ll be returning to time and time again, as there’s no way I absorbed the entirety of its wisdom on first pass. However, I did take away a great deal from my first experience with… [Read More] What I Learned From What Works on Wall Street
We believe that an investor's behavior can seriously impact their market returns. This category page is dedicated to informing our readers of certain behaviors that are known to damage investor's returns over time. We also discuss strategies to avoiding these damaging behaviors.
I’ve written before about average returns and how they rarely occur. It’s great to look at long term market averages, but on a year-to-year basis, those averages should absolutely not be what investors expect. If you invest with the expectation of achieving average market returns year after year, you’re going to experience quite the emotional ride.… [Read More] Averages Can Be Misleading
https://media.blubrry.com/invest/p/content.blubrry.com/invest/Don_t_Let_the_Status_Quo_Bias_Stop_You_From_Saving_More_July_2015_Podcast.mp3Subscribe: Android | RSSWe fear change. It’s a fact. Think about the last time Twitter or Facebook updated its app. How many people initially complained about it? I’m guilty of eating the same thing for breakfast every day, scrambled egg whites with assorted vegetables. Don’t even think about recommending cereal to me. We are creatures… [Read More] Don’t Let the Status Quo Bias Stop You From Saving More
https://media.blubrry.com/invest/p/content.blubrry.com/invest/Naive_Diversification_in_401k_s.mp3Subscribe: Android | RSSIf you’ve ever eaten at a buffet, you probably know what the naive diversification heuristic is without even realizing it. Let me explain. When I visit a buffet, I end up taking a little bit of everything so I don’t miss out on the restaurant’s best dish. It always seems like a… [Read More] The Naive Diversification Heuristic in 401k’s
https://media.blubrry.com/invest/p/content.blubrry.com/invest/The_Sunk_Cost_Fallacy_July_2015_Podcast.mp3Subscribe: Android | RSS“It’s okay to be wrong, it’s not okay to stay wrong”. Maybe you’ve heard some variation of this saying before? It’s one of my favorites, as it applies nicely to all facets of life, especially investing. A common reason many of us decide to “stay wrong”, rather than change, is the sunk… [Read More] The Sunk Cost Fallacy: Keeping You Wrong
https://media.blubrry.com/invest/p/content.blubrry.com/invest/Fighting_the_Endowment_Effect.mp3Subscribe: Android | RSSAs humans, we’re all affected by different behavioral biases. We often let emotions dictate our actions, which can lead to unfavorable outcomes. These inherent biases make rational investing a difficult task. The endowment effect is one such bias that works against us as investors. Professor of Behavioral Science and Economics at the University… [Read More] Fighting the Endowment Effect