Posts Tagged ‘Denise Shull’

Winning with Advanced Market, Trading, and Risk Psychology

Winning with Advanced Market, Trading, and Risk Psychology

Courtesy of Damien Hoffman at The Wall St. Cheat Sheet

This is a guest post by Denise Shull from TraderPsyches.

blue-brainIn order to really understand either what went wrong in the credit housing bubble or to improve institutional or individual risk management processes, one really needs to take a step back and rethink their thinking. We tend to believe that we know how we think or even worse, that we know the best way to think (after all didn’t we go to college to learn to think?) but given the advances in brain science in the past decade it is clear that we really don’t know how it is we think.

Thinking is germane to analysis and decisions and in turn confidence and beliefs are germane to implementing a decision. I still can think of no better way to say it than Colin Camerer of Cal-Tech and his co-authors Lowenstein and Prelec when they said “It is NOT ENOUGH (emphasis mine) to know what SHOULD be done, one must also FEEL it.” Well invert that and you get that all doing has a feeling associated with it.

Now Damasio and Bechara showed us this from The University of Iowa and USC starting in the early 1990’s but word really hasn’t hit Wall Street (or Washington either btw). Behavioral finance observations confirm that we indeed feel better when we rely purely on mathematical formulas but the real world doesn’t always fit into an equation.

And guess what – our brains (particularly on risk) know it! On the majority of days, it works fine to do it the old way. But doing well in the middle isn’t what makes you the real money or saves you from the black swans – that requires knowing what to do when things DO NOT go according to plan.

The solution lies in using our “maths” within the context of consciousness about the foundational and relevant qualitative data. Our brains are good at pattern recognition – call it implicit learning or intuition – it is the same. The problem is we don’t value that data – partially because we don’ t know how. In fact not all that long ago it wasn’t blink and Malcolm Gladwell getting $100K to talk about


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Is a Mini-Bubble Brewing?

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Is a Mini-Bubble Brewing?

Courtesy of Damien Hoffman at Wall St. Cheat Sheet

mini bubble brewing?The markets are both fundamental and psychological. On the fundamental front, the economy is in horrible shape but the Fed may have printed enough money to avoid The Great Depression 2. However, on the psychological side I smell fear in the bear camp as markets keep moving higher.

Fear is an interesting emotion because it works both sides of the market. Obviously, on the downside fear leads to panic selling and oversold markets. However, on the upside, fear causes chasing by those who feel they are being left behind. I worry that if the markets continue to hold support and subsequently expand higher, a mini-frenzy may ensue to blow a mini-bubble.

The mechanics of such an event look like the following:

1) The market increases in value.

2) Money managers are forced to overrule their fundamental analysis and buy equities because managers are judged against the (rising) indices. This is commonly referred to as “performance anxiety.”

3) Individual investors are forced to overrule what they see economically in their community because they must make some money back (especially the Boomers and retirees) like the charlatans on TV claim they have been doing.

Therefore, you have two strong waves of future buyers slowly giving in to fear. Just like on the way down, as fear spreads the feedback loop simply feeds on itself to perpetuate rising markets.

Market psychology expert Denise Shull at Trader Psyches explains, “Brain and behavioral research, as well as our first-hand coaching experience, shows that the fear of ‘missing out’ is more compelling that the possibility of reward. In reality, this tendency drives all bubbles.”

Although the variables above have already been pushing the market higher, there are still a lot of burned investors missing the ride (a roughly 50% ride off the S&P 500 bottom, I might add). In the current market I have seen sentiments shift from hating stocks because they are down, to hating stocks because the move up was missed. On a weekly basis, I’m getting more fear-based emails and inquiries about whether it’s time to “jump in.”

If, and that’s a big if, the fear spreads to pandemic proportions, we could watch the markets go vertical as the great chase…
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Phil's Favorites

Peace advocates have long been found among veterans who fought in America's wars

 

Peace advocates have long been found among veterans who fought in America's wars

Veterans for Peace gather for a Veterans Day ceremony at the Minnesota State Capitol mall, Nov. 11, 2014, in St. Paul. AP/Jim Mone

Courtesy of Michael Messner, University of Southern California – Dornsife College of Letters, Arts and Sciences

If President Donald Trump had gotten his way, the nation would have celebrated the centennial of the World War I armistice last year on Nov. 11 with ...



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Zero Hedge

China's Credit Creation Unexpectedly Collapses At The Worst Possible Time

Courtesy of ZeroHedge View original post here.

Over the weekend, we observed that China's slumping wholesale inflation, or PPI, which is so critical for corporate profits and sparking benign, demand-driven inflation in the economy, and which in October tumbled to a three year low assuring that Chinese dumping and exports of deflation will only further depress global reflation efforts...

...



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Insider Scoop

6 Stocks To Watch For November 11, 2019

Courtesy of Benzinga

Some of the stocks that may grab investor focus today are:

  • Wall Street expects Qurate Retail, Inc. (NASDAQ: QRTEA) to report quarterly earnings at $0.30 per share on revenue of $3.13 billion before the opening bell. Qurate Retail shares fell 0.2% to $9.38 in after-hours trading.
  • Pingtan Marine Enterprise Ltd (NASDAQ: PME) ...


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The Technical Traders

Welcome to the Zombie-land Of Investing - Part I

Courtesy of Technical Traders

This current market environment is very reminiscent of the 2006-08 market environment where price rotated into weakness on technicals and continued to establish new all-time price highs in the process – creating what we are calling a “zombie-land melt-up”.  This very dangerous price action is indicative of money chasing a falling trend.  Where technicals and fundamentals are suggesting that price is actually weakening quite substantial, yet the process of price exploration is continually biased towards the upside as investors continue to pile onto the back of the beast expecting a further melt-up.

Let’s take a look at what happened to the ES and Gold in 2006 an...



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Kimble Charting Solutions

Gold Indicator Sending Fresh Bearish Message, Says Joe Friday!

Courtesy of Chris Kimble

Could the Gold/US Dollar ratio be sending a fresh concerning message to Gold bulls this week? Joe Friday says Yes!

This chart looks at the Gold/Dollar ratio over the past 8-years.

The intersection of two long-term channel met at (1) a few months ago. The ratio was testing the bottom of one as resistance and the top of another as resistance at the same time.

As the ratio was testing both channels as resistance, a sizeable bearish reversal pattern took place at (1).

Since the reversal pattern took place, the ratio has been heading lower.

Joe Friday Just The Facts Ma’am; The ratio is breaking below...



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Digital Currencies

3 Reasons Why One Trader Didn't "Manipulate" Bitcoin Price To $20K

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via CoinTelegraph.com,

Bitcoin price highs in 2017 were not the result of a single trader on an exchange, the CEO of payment company Circle claims. In a series of tweets on Nov. 4, Jeremy Allaire disputed ...



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Chart School

Gold Gann and Cycle Review

Courtesy of Read the Ticker

Gold has performed well, golden skies are here again. In fact it has been a straight line move, and this is typically unusual and a pause can be expected.

It seems the markets are happy again, new highs in the SP500, US 10 year interest rates look to re bound, negative interest may soften. The US FED has reversed their QT and now doing $250BN (not QE) repo. The main point is the FED has stopped QT, and will do QE forever. The evidence now is the FED put is under market risk and the possibility of excessive losses do not exist. 

Point: If in future if there is market risk, the FED will print it's way out of it.
Subject To: In this blog view. The above is so until the amount required rocks confidence in the US dollar as a reserve currency.&n...



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Lee's Free Thinking

Today's Fed POMO TOMO FOMC Alphabet Soup Unspin

Courtesy of Lee Adler

But make no mistake, if the Fed wants money rates to stay down by another quarter, it will need to imagineer even more money.

That’s on top of the $281 billion it has already imagineered into existence since addressing its “one-off” repo market emergency on September 17. This came via  “Temporary” Repo Man Operations money, and $70.6 billion in Permanent Open Market Operations (POMO) money.

By my calculations that averages out to $7.4 billion per business day. That works out to a monthly pace of $155 billion or so.

If they keep this up, it will be more than enough to absorb every penny of new Treasury supply. That supply had caused the system to run out of money in mid September.  This flood of paper had been inundati...



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Biotech

The Big Pharma Takeover of Medical Cannabis

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

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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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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