Posts Tagged ‘rational thinking’

Your Financial Horoscope

Tim draws parallels between believing in horoscopes and other superstitions and "magical investment thinking." – Ilene

Your Financial Horoscope

Courtesy of Tim at The Psy-Fi Blog  

horoscopeUsing the latest in IP address geo-detection and profiling technology we’re delighted to bring you your personalized horoscope:

You have a great need for other people to like and admire you. You have a tendency to be critical of yourself. You have a great deal of unused capacity which you have not turned to your advantage. While you have some personality weaknesses you are generally able to compensate for them. Your sexual adjustment has presented problems for you. Disciplined and self-controlled on the outside, you tend to be worrisome and insecure on the inside. At times you have serious doubts as to whether you have made the right decision or done the right thing. You prefer a certain amount of change and variety and become dissatisfied when hemmed in by restrictions and limitations. You pride yourself as an independent thinker and do not accept others’ statements without satisfactory proof. You have found it unwise to be too frank in revealing yourself to others. At times you are extroverted, affable, sociable, while at other times you are introverted, wary, and reserved. Some of your aspirations tend to be pretty unrealistic. Security is one of your major goals in life.

Trick or treat?

cargo cultCargo Cults

In the Second World War many remote Pacific islands found themselves occupied by warring forces. This often led to an unexpected windfall for the primitive islanders as the troops were supplied from the air with unimaginable luxuries like corned beef, custard powder and anti-aircraft guns. When the war ended and the troops went home the planes stopped coming so, naturally, the islanders hatched a cunning plan to make them come back again.

They created the rudiments of the apparatus that the ground crew had used – paddles to welcome the aircraft, fake headsets for the radio operator, fake landing lights – and engaged in the same strange ritual ceremonies, behaviour generally known as a cargo cult. Yet no matter how they adjusted the ceremony they couldn’t get it quite right and the planes never came back. It would be crass simplicity to suggest that the same kind of magical thinking pervades the world of investment. Only it does, of course.

Paranormal Beliefs

The curiously enduring…
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Bacteria, Boids and Market Instability

Here’s some weekend reading in advance. Consider throwing away economic models based on the misconception that people behave rationally and start anew with the premise that we are like mindless bacteria. – Ilene

Bacteria, Boids and Market Instability

bacterial behaviorCourtesy of Tim at  The Psy-Fi Blog

The Gaps Between People

Old-time economics saw investors as rational individuals, all behaving autonomously in a logical fashion, rather like Mr. Spock umbilically attached to Deep Thought. Today not even economists really believe that this is how people actually operate, but figuring out something better is a not insignificant task. Psychologists, however, have long known that what happens in the gaps between people is as important as what happens in the gaps between their ears – so is there something going on in the interactions between investors, which causes market instability?

One possible answer comes from the study of bacteria. Just as we might have suspected all along, stockmarket investor behaviour can be modelled by examining the way a bunch of brainless, single celled and barely animate creatures interested only in food and reproduction disport themselves on a Petri plate. Sometimes analogies are just too sweet.

Investing Earthquakes

The critical thing about any economic model is that it arrives at results that look like what we actually see in markets. Mostly the jargon fixated commentators who dominate the media are happy to talk in terms of business cycles when, in reality, the only cycles seen in most investing circles are the ones used by the boys and girls delivering lunchboxes. What we actually get, if we look at stockmarkets and stock prices, is something that looks like the readout we see from a seismograph when an earthquake occurs.

If we start by making a few assumptions about what investors actually do in real life – like, for instance, that they don’t behave rationally and that they tend to copy successful behaviour from people they’re closely connected to – we can rapidly create a model that produces outputs that look very different from those generated by models of people who behave independently and rationally. In fact the output of these models looks a lot like the readout we see from a seismograph when an earthquake occurs.

So it seems that the interactions between investors and how these interactions affect their willingness or otherwise to invest is the critical thing in these models.…
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Phil's Favorites

Kansas Ends Bad Economic News by Not Reporting It

The "ostrich approach" to measuring real-life results of economic policy experiments is to deny the results exist. The problem with that is even failed experiments provide a lot of important information. For instance, consider Kansas. 


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Timely (Free) Advice

By BroyHill. Originally published at ValueWalk.

This wonderful advice from Fred Schwed was originally published in 1940 – some things never change.

“When there is a stock-market boom, and everyone is scrambling for common stocks, take all your common stocks and sell them. Take the proceeds and buy conservative bonds. No doubt the stocks you sold will go higher. Pay no attention to this – just wait for the depression which will come sooner or later. When this depression – or panic – becomes a national catastrophe, sell out the bonds (perhaps at a loss) and buy back the stocks. No doubt the stocks will go lower still. Again pay no attention. Wait for the next boom. Continue to repeat this operation as long as you live, and you’ll have the pleasure of dying rich”.


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Zero Hedge

Are You Ready?

Courtesy of ZeroHedge. View original post here.

Presented with no comment...



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Kimble Charting Solutions

U.S. Dollar Rally: A tale of two chart patterns

Courtesy of Chris Kimble.

This article was originally written for See It Market.

The U.S. Dollar Index has been trading in a wide consolidation pattern over the last 18 months or so.  But after the recent U.S. Dollar rally, that consolidation has formed two distinct chart patterns.

And as you may have guessed… one is bullish while the other is bearish.



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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Oil Rises as OPEC Chief Barkindo Seeks to Resolve Output Plan (Bloomberg)

Crude advanced as OPEC’s secretary-general was due to visit Baghdad on Tuesday for talks aimed at resolving a deal on output after Iraq said it should be exempt from planned cuts.

Iron Ore Hoisted on Coat-Tails of Coal’s Record Rally in China (Bloomberg)

Iron ore is surging thanks to its bulk-commodity compatriot, coal. Iron ore futures in Singapore ad...

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Chart School

RTT browsing latest..

Courtesy of Read the Ticker.

Please review a collection of WWW browsing results.

Date Found: Sunday, 10 April 2016, 01:58:50 PM

Click for popup. Clear your browser cache if image is not showing.
Comment: Pay attention : www.thefelderrepo...

Date Found: Monday, 11 April 2016, 03:52:28 PM

Click for popup. Clear your browser cache if image is not showing.
Comment: RTT: Who owns the SP500?

Date Found: Monday, 11 April 2016, 03:53:00 PM...

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Swing trading portfolio - week of October 24th,2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.


This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...

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Members' Corner

World Series 2016

Courtesy of Nattering Naybob.

The good news... Waiting since 1945, after 71 years, the Chicago Cubs have a chance to win their first WS since 1908.  The bad news... The Cubs face an Indian's team that has been waiting since 1948 to win a WS and last appeared in 1997.

CLE swept BOS, and took out TOR who had swept TEX, and has only lost ONE post season game.  That being Game 4 ALCS at TO, yet, during that series, no Indians starting pitcher made it through more than six innings. 

In fact, Trevor Bauer, only lasted two outs during his one start, leaving Merritt and the pen to bear the burden of over eight innings of baseball.  Mid range reliever Merritt notched a victory in that game with ERA 1.80; WHIP 0.60 with 5 IP. 

What does all that tell you? Oddly enough, without Carr...

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Mapping The Market

The Most Overlooked Trait of Investing Success

Via Jean-Luc

Good article on investing success:

The Most Overlooked Trait of Investing Success

By Morgan Housel

There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.

Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...

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Digital Currencies

Gold, Silver and Blockchain - Fintech Solutions To Negative Rates, Bail-ins, Currency Debasement and Cashless

Courtesy of ZeroHedge. View original post here.

By Jan Skoyles

I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.


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Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.

To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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