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
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/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
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
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