………..Investors have to face fear every day, although more so on some days than others (nobody complains about volatility to the upside), and don’t often face it very effectively. To quote Jason Zweig paraphrasing Mike Tyson, “investors always have a plan until the market punches them in the face.” Real fear comes with names, faces, and a story.…
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I want to ask you a question. How many hours per day do you think? “I never thought about that.” So let me get this straight. You’re thinking all the time, and yet, you never think about how much time you spend thinking. That sounds like an addiction to me. I know, because I’m addicted to thinking too.…
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Overconfidence can have a profound impact on our decision making, but can be difficult to acknowledge and even harder to rectify. It also seems likely that overconfidence is a particularly pernicious bias in the investment industry, for the following reasons: – Selection bias: There is probably a selection bias into front office investment management roles…
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I have always been a fan of Decision Theory – the notion of how we make decisions with varying amounts of information has always been fascinating to me. This should seem obvious since trading is a profession that straddles both normative and descriptive decision making. Normative decision is about making decisions with incomplete information whereas…
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‘I plan for the 6th order effect and I do it in about half a second.’ If I had heard that from anyone other than another fighter pilot, I would’ve laughed them out of the room but, from my buddy, Jim – I knew it was true. I flown with him many times before. He…
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I have thought and continued to think a great deal about the relationship between critical thinking and cynicism — what is the tipping point past which critical thinking, that centerpiece of reason so vital to human progress and intellectual life, stops mobilizing our constructive impulses and topples over into the destructiveness of impotent complaint and embittered resignation, begetting cynicism?…
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One of the things I have noticed about travel is that being human is largely universal – that would seem to be an odd statement that touches on the banal. But the natural human instinct is to think that people who are not like us are different. The tendency is to split the world into…
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Sports analogies often help us think about how we make investing decisions. Are there streaks in random data? Do past results affect future ones? And most importantly, if you know people have certain biases, what can you do to get a leg up? In this episode, hosts Dan Villalon and Gabe Feghali talk to AQR Principal and…
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