Ben Carlson of A Wealth of Common Sense has this to say regarding the recent Greek drama: “If you’ve been following the Greek saga from the start you begin to realize that even the experts on the situation are pretty much just making it up as they go. How often do the economists change their… [Read More] We All Hate Uncertainty
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.
https://media.blubrry.com/invest/p/content.blubrry.com/invest/Recency_Bias_is_Everywhere_June_2015_Podcast.mp3Subscribe: Android | RSSRecency bias is one of many cognitive errors that plague investors. It refers to the human tendency to overemphasize more recent data. The recency bias is most likely to be discussed in the realm of behavioral finance, however this bias can be found in every day life too. I want to share… [Read More] Recency Bias is Everywhere
If you aren’t familiar with Google Trends, I recommend checking it out. This useful tool measures how frequently a term is searched for in Google. Another feature lets you compare search terms to one another and analyze their relative popularity over time. This reminds me of point and figure relative strength charts, but I digress. Jimmy… [Read More] Google Trends Shows Disappointing Financial Search Data
For many investors, their workplace retirement account is the largest nest egg they’ll accumulate. Whether your option is a 401k, 403b, or 457, recently the message has become loud and clear: tax-deferred savings are something to take advantage of. If you’re contributing to your retirement account at work, good stuff. Now onto the next hurdle: how much should you be contributing?… [Read More] Don’t Trust Your 401k’s Default Contribution Rate
Happy Stock Market Games, and may the odds be ever in your favor! If you took an investing class in high school or college, you likely played some variation of a stock market game. You know, that game where teams try to obtain the best investment returns over a semester, month, or set period of time.… [Read More] Stock Market Games Encourage Poor Behavior
I’ve recently been reading the fourth edition of Jim O’Shaughnessy’s What Works on Wall Street. One of the topics covered early on by Jim is why statistically based models beat human forecasters. To summarize, it’s all about our human inability to make emotionless decisions. Models never vary. They display an utter lack of emotion that we’ll never… [Read More] On Cognitive Biases and the 2015 Masters