You’re a Liar
Courtesy of Michael Batnick
Brendan Mullooly asked a bunch of people the following question:
What do you consider to be your biggest behavioral bias (as it pertains to investing or personal finance) and how do you work to control it?
My answer:
Hindsight bias was my biggest hurdle to overcome.
Hindsight bias makes one part of our brain lie to another part without even realizing it. The way I conquered my internal liar was to write down all of my trades and why I did them. Once every few weeks I would read what I wrote in order to check myself. If I knew Amazon was going higher, why did I short it 5 times due to valuation concerns?
This is a fool proof system. I mean, it takes a real fool to think they knew what was going to happen when their own words prove otherwise.
My favorite answer came from Jim O’Sam:
“What do you consider to be your biggest behavioral bias?” Being a human being.
“How do you work to control it?” Being a quant.
Hit the link below for the whole shabang.
