Time to Wake Up?

By |2018-01-29T13:19:20+00:00January 29th, 2018|Categories: Global Market Update|Tags: , , |

When does your alarm go off? Illustration: Sun Ladder. Source: Wikipedia Henry David Thoreau once wrote, “The mass of men lead lives of quiet desperation.” Today, he might say, “Most people are asleep.” In the early 19th century folks had to fight just stay alive: to feed, clothe, and keep themselves and warm and dry. Today, life isn’t so grim. We don’t struggle with starvation any more. Indeed, most of our diseases are ones of overabundance, not [...]

The Investor’s Enemy

By |2016-11-17T15:53:04+00:00April 19th, 2016|Categories: Global Market Update|Tags: , , |

Why is investing such hard work? Photo: Alvimann. Source: Morguefile Investing should be simple: spend less than you earn, and sock away the extra. But we have a host of habits that get in the way. First there’s the lure of excess spending. Our lifestyles are determined more by our peer-group rather than our financial goals. That’s why young athletes with seven-figure incomes end up bankrupt just a few years later. Then there’s predatory financial products: complex [...]

Investment Management / Self Management

By |2016-11-17T16:02:36+00:00December 31st, 2015|Categories: Global Market Update|Tags: , , |

Do our emotions work against us? Source: Wikipedia They can with investing. Our own fears or doubts or arrogance get in the way. For example, most of us are afraid of losses: the pain of losing money is a lot worse than the regret we might feel by missing out in an up market. So we leave our money in safe, low-interest bank deposits rather than risk it in a volatile market, even though we know inflation [...]

The Emotional Investor

By |2016-11-17T16:16:45+00:00June 24th, 2015|Categories: Classical Investing, Global Market Update|Tags: , , |

By Douglas Tengdin, CFA How do you feel about investing? On one level, that’s a foolish question. Investments aren’t supposed to be objects of affection. It’s one of the most basic errors to fall in love with a stock. You should never love something that doesn’t love you back. It keeps you from selling when you should; it makes you focus on just one small part of a much larger financial picture; it’s like obsessing on the [...]

The Emotional Investor (Part 4)

By |2016-11-17T16:23:29+00:00March 19th, 2015|Categories: Global Market Update|Tags: , |

Image Source: FXCM Do you have to be brain-damaged to win at investing? Sometimes it seems that way. A researcher wanted to study the effect emotions on investors. So he gave a group of normal and brain-damaged participants each $20 and asked them to choose whether or not to bet on a coin toss 20 successive times. If they lost, they lost a dollar; if they won, they won $2.50. Rationally, everyone should bet every time. The [...]

The Emotional Investor (Part 3)

By |2016-11-17T16:26:36+00:00February 13th, 2015|Categories: Global Market Update|Tags: , , |

Image Source: Trent Capital Can investing ever be emotion-free? In the short-run stocks are driven by investors’ emotions. A company may be up 4% one day and down 7% the next, based on a of couple analysts’ comments. Has the fundamental value changed that much in 48 hours? Keynes famously noted that the market can be a beauty contest, where judges don’t choose the best looking contestant, but the one they think the other judges will choose. But [...]

The Emotional Investor (Part 2)

By |2016-11-17T16:26:47+00:00February 12th, 2015|Categories: Global Market Update|Tags: , , |

Image Source: Behaviorgap How do we manage our emotions? Investing is challenging. It brings out the worst in us. When the market is running, we just want more. And when the market goes down we’re tempted to sell just when things are bottoming out. It’s been shown that money goes into and out of mutual funds following the market. As a result, these investors typically underperform their funds by a lot—often by two to three percent. Three [...]

The Emotional Investor (Part 1)

By |2016-11-17T16:26:53+00:00February 11th, 2015|Categories: Global Market Update|Tags: , , |

Image Source: Jeremy P. Gray Photography All rights reserved How do you feel about your investments? On one level, that’s a foolish question. Investments aren’t supposed to be objects of affection. It’s one of the most basic errors to fall in love with a stock. You should never love something that doesn’t love you back. It keeps you from selling when you should; it makes you focus on just one small part of a much larger financial [...]

Under Control

By |2011-12-21T23:23:26+00:00December 9th, 2011|Categories: Global Market Update|Tags: , , |

When do people make the most painful investing mistakes? There’s not a lot of research on this, but I’d bet that most investment errors are linked to charged emotions. The behavioral biases that most often affect investors are well-documented: overconfidence, loss-aversion, confirmation bias, selective perception, and so on. What’s not well-studied is […]