Posts Tagged ‘over-confidence’

Depressed Investors Don’t Need Feedback. Everyone Else Does.

Depressed Investors Don’t Need Feedback. Everyone Else Does.

depressedCourtesy of Tim at The Psy-Fi Blog

Depressed Yet Clearsighted

Although it’s easy enough to show that overconfidence is a blight on investment performance we need to be careful that we don’t blind ourselves to an important reality. Overconfidence is not simply a problem for investing, it’s an issue that applies to most of us, most of the time in most of the things that we do. It’s not something we can simply stop because we wish it so.

In fact, it turns out that there is only one group of people who are not habitually overconfident. Unfortunately these people are, instead, habitually miserable. It turns out that to invest sensibly you need to be depressed.

Overconfident or Depressed

That most people are overconfident is a finding that’s been replicated scores of times on a wide variety of tasks. However, the research showing the so-called depressive realism effect indicating that depressives are almost alone in not exhibiting overconfidence at least suggests a reason – that feeling confident about ourselves is a necessary antidote to real life and that if we saw our lives and the world we live in as the ghastly messes they truly are, we’d be unable to function properly.

Trading off our mental health and general happiness in order to improve our investing returns, however, seems a bit of a bad bargain – although, we could equally well argue that if most people properly analysed their real returns they’d probably feel pretty depressed anyway. Of course, it’s quite possible that when an overconfident investor runs into the brick wall of a real bear market the cognitive car crash this causes can lead them to develop an aversion for all types of investing activities. Anything rather than face the grim reality of life as an average stock picker.

Feedback’s the Key

Fortunately there is an alternative to taking the anti-happy pills but it does require investors to force themselves to face their decisions, something the evidence suggests that many investors are reluctant to do. The problem is that unless we analyse what we’ve actually done we won’t change our behaviour, even when it’s obviously not in our interests, until we have no choice. Which will usually be when the repo merchant knocks on the door. Alternatively we need to calibrate ourselves against our actual performance and learn


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ValueWalk

Pandemic-related deterioration may cause a drop in PMI

By Gorilla Trades. Originally published at ValueWalk.

In an intra Day note to investors, Gorilla Trades strategist Ken Berman, while commenting on the pandemic-related deterioration, said:

The major indices are all trading lower at midday following another choppy and bearish morning session on Wall Street. The continued exponential growth in the number of U.S. COVID-19 cases and the weak economic data have been weighing on investor sentiment, but stocks are holding up relatively well following yesterday’s bounce. The government jobs report was at the center of attention this morning following yesterday’s record number of new jobl...



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Phil's Favorites

Unmasking the Truth on Masks to Protect Against Coronavirus: Fire the Surgeon General

Courtesy of Pam Martens

By Pam Martens and Russ Martens: April 3, 2020 ~

On March 23 we wrote this:For want of a mask the largest economy in the world has been gutted, with Goldman Sachs now projecting that U.S. GDP could contract by as much as 24 percent in the second quarter.” Now, in the past two weeks, 10 million Americans have filed claims for unemployment. Let that sink in, 10 million of our fellow citizens have l...



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Kimble Charting Solutions

Depression Coming or Is the Bottom Already In? Joe Friday Says Your Answer Lies Here!

Courtesy of Chris Kimble

Are we headed towards a Depression or is the worst already behind us? In today’s world, comparisons to the great depression are easy to find.

Are the Depression concerns well founded or are the declines of late already pricing in a bottom?

In my humble opinion, this chart and the upcoming price action of this index will go miles and miles towards telling us if we are headed towards very tough times or if the huge declines of late are actually in a bottoming process.

This chart looks at the Thomson Reuters Equal Weighted Commodity Index on a monthly basis over the past 54 years. The index has been heading south, reflecting weakness in demand for basi...



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Zero Hedge

Wall Street Wins Again: Banks Force Treasury To Double Rate On Small Business Rescue Loan

Courtesy of ZeroHedge View original post here.

Update (1800ET): And so Wall Street wins again.

After we warned earlier that the SBA's $350BN Paycheck Protection Program, which is expected to be launched at midnight tonight and is meant to bailout America's small and medium business (Steven Mnuchin said that he will double the interest rate on the SBA loan from 0.50% to 1.00% in order to appease banks seeking higher interest rates to participate in the Treasury's bailout program and lend money to the same taxpayers who bailed them out 12 years ago.

These are same banks, mind you, that just s...



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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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Biotech/COVID-19

Antibodies in the blood of COVID-19 survivors know how to beat coronavirus - and researchers are already testing new treatments that harness them

 

Antibodies in the blood of COVID-19 survivors know how to beat coronavirus – and researchers are already testing new treatments that harness them

A person who has recovered from COVID-19 donates plasma in Shandong, China. STR/AFP via Getty Images

Ann Sheehy, College of the Holy Cross

Amid the chaos of an epidemic, those who survive a disease like COVID-19 carry within their bodies the secrets of an effective immune response. Virologists like me...



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The Technical Traders

Founder of TradersWorld Magazine Issued Special Report for Free

Courtesy of Technical Traders

Larry Jacobs owner and editor of TradersWorld magazine published a free special report with his top article and market forecast to his readers yesterday.

What is really exciting is that this forecast for all assets has played out exactly as expected from the stock market crash within his time window to the gold rally, and sharp sell-off. These forecasts have just gotten started the recent moves were only the first part of his price forecasts.

There is only one article in this special supplement, click on the image or link below to download and read it today!

...

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Chart School

Big moving Averages and macro investment decisions

Courtesy of Read the Ticker

When price is falling every one wonders where demand will come in.


RTT black screen Tv videos study the simplest measure of price (simple moving average). What has happen before guides us now. 














Changes in the world is the source of all market moves, to catch and ride the change we believe a combination of Gann Angles, ...

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Members' Corner

10 ways to spot online misinformation

 

10 ways to spot online misinformation

When you share information online, do it responsibly. Sitthiphong/Getty Images

Courtesy of H. Colleen Sinclair, Mississippi State University

Propagandists are already working to sow disinformation and social discord in the run-up to the November elections.

Many of their efforts have focused on social media, where people’s limited attention spans push them to ...



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Digital Currencies

While coronavirus rages, bitcoin has made a leap towards the mainstream

 

While coronavirus rages, bitcoin has made a leap towards the mainstream

Get used to it. Anastasiia Bakai

Courtesy of Iwa Salami, University of East London

Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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Promotions

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Feb. 26, 1pm EST

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Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

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Mike will show off the TradeExchange's new platform which you can try for free.  

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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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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