Posts Tagged ‘Behavioural biases’

Confirmation Bias, The Investor’s Curse

Confirmation Bias, The Investor’s Curse

Courtesy of Tim at The Psy-Fi Blog

Woman in the Tomb at

Clinging to the Wreckage of Old Ideas

The problem of confirmation bias – the tendency of people to seek evidence confirming an already held opinion and to avoid looking for that which might upset their carefully constructed mental models has attracted a lot of attention from researchers. It occurs across all domains of human endeavour and triggers all sorts of implausible behaviour, yet investors and institutions remain in its thrall.

We find examples in law courts and doctor’s surgeries, in scientist’s laboratories and the lairs of legislators. So we shouldn’t be surprised to find it coursing through the veins of economists and investors, colouring their every thought and structuring their every idea. Of course a rational market participant, faced with a theory built on a crumbling cornerstone will abandon their ideas and look for some new ones. As you’d expect, therefore, we do no such thing, clinging irrationally to the wreckage of our dreams as they collapse around us.
 

Bedford and Cavour,

Disconfirming Science

Science is perhaps the area in which we might expect confirmation bias to be least effective. After all, the processes of science are built around the institutionalisation of disconfirmation. New ideas have to run the gamut of envious colleagues who generally hate nothing more than a smart ass and take great pleasure in proving them wrong. Despite this scientists have generally proven remarkably reluctant to give up discredited theories. Indeed science has often proceeded for decades on the basis of ideas that could easily have been disconfirmed had anyone been sufficiently motivated to do so.

So, for instance, the idea that the universe is stable and unchanging was held way into the twentieth century despite the fact that Newton’s laws of gravitation implied something different. To be precise, they suggested that unless the universe was actually expanding gravity should be causing all the bits of matter in the cosmos to hurtle together towards a central point in a manner calculated to render discussions of globalisation, polar bear populations and national debt levels redundant. Yet when Einstein’s theories also predicted an expanding universe he simply made up a special constant, which he later had to ruefully remove, to stop this unwanted behaviour so ingrained was the…
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What if it Doesn't End Badly?

 

What if it Doesn’t End Badly?

Courtesy of 

The past decade has been one of endless prosperity. At least in risk assets. Since 2011, the S&P 500 has gained nearly 300%.

The return on certain individual securities makes the overall stock market look like a savings account. Over the same time, Apple and Amazon have gained more than one thousand percent. Netflix more than two thousand percent. Tesla more than sixteen thousand percent. $10,000 invested in Bitcoin five years ago is worth $1.2 million.

GameStop is up 200% in th...



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ValueWalk

Inside Morgan Stanley: Power Struggles, Internal Politics, and Two Sides to Every Story

By Adam Torkildson. Originally published at ValueWalk.

Personal Investments

Was it a minor violation of a corporate policy or more about inside politics? That is what people familiar with recent changes at Morgan Stanley are asking today in light of the financial service company recently parting ways with one of their top performers.

Thane Stenner headed a significant team for Graystone Consulting, a business unit of Morgan Stanley that handled nearly $20 billion of assets for institutional clients out of its San Francisco office. One of the top-performing teams across the entire Morgan Stanley/Graystone system, Stenner and his tea...



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Zero Hedge

Bond Bloodbath Blows Up Stocks As Redditors-Revenge Hammers Hedgies (Again)

Courtesy of ZeroHedge View original post here.

Bonds and stocks were both battered today...

Source: Bloomberg

Which is why we wheeled out the deer!

Today was the worst day for equity/bond investors since March 2020...

...



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Politics

What is fascism?

 

What is fascism?

A Donald Trump supporter wears a gas mask and holds a bust of him after he and hundreds of others stormed the Capitol building on Jan. 6, 2021. Roberto Schmidt/AFP via Getty Images

Courtesy of John Broich, Case Western Reserve University

Since before Donald Trump took office, historians have debated whether he is a fascist.

As a teacher of World War II history...



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Biotech/COVID-19

How does the Johnson & Johnson vaccine compare to other coronavirus vaccines? 4 questions answered

 

How does the Johnson & Johnson vaccine compare to other coronavirus vaccines? 4 questions answered

The Johnson & Johnson vaccine only requires one dose. Phill Magoke/AFP via Getty Images

Courtesy of Maureen Ferran, Rochester Institute of Technology

Editor’s note: On Tuesday, Feb. 24, the U.S. Food and Drug Administration released the results of its trial of the Johnson & Johnson coronavirus vaccine. The FDA found the vaccine to be safe...



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Digital Currencies

Bridgewater Explains When It Will Invest In Bitcoin

Courtesy of ZeroHedge

Two weeks ago, Bridgewater founder Ray Dalio called Bitcoin "one hell of an invention" adding that:

"I expect Bridgewater to soon offer an alt-cash fund and a storehold of wealth fund in order to better deal with the devaluation of money and credit that we consider to be a major risk and opportunity, and Bitcoin won’t escape our scrutiny.”

And now, after significant attention that his comments received, Senior Portfolio Strategist Jim Haskel sits dow...



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Kimble Charting Solutions

Is Rising Inflation About To Hit U.S. Economy In Big Way?

Courtesy of Chris Kimble

Inflation seems to be a thing of the past… but current trading in bond and commodity markets tell us that it could become a thing of the future!

Inflation hasn’t been an issue, or even on our radar, since the 1980s. Sure, the 2007 surge in oil prices offered some concern but the financial crisis killed any thoughts of inflation.

So what’s got us concerned about inflation in 2021?

Today we take a look at long-term charts of two potential inflation indicators: Crude Oil ...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Saturday, 29 August 2020, 05:46:16 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: Low liquidity means price can MOVE fast either way!



Date Found: Saturday, 29 August 2020, 05:52:11 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: if you have 100% of life savings in stocks alone, please adjust for a crash...



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Mapping The Market

The Countries With The Most COVID-19 Cases

 

The Countries With The Most COVID-19 Cases

By Martin Armstrong, Statista, Jan 12, 2021

This regularly updated infographic keeps track of the countries with the most confirmed Covid-19 cases. The United States is still at the top of the list, with a total now exceeding the 22 million mark, according to Johns Hopkins University figures. The total global figure is now over 85 million, while there have been more than 1.9 million deaths.

You will find more infographics at ...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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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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