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Nuggets of Investing Wisdom

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Part 2: Human Foibles and Investment Decision Making

A set of rules to develop a behavioral edge – Part 7

  • by Rodney Smith
  • Posted on December 4, 2022December 4, 2022
  • Part 2: Human Foibles and Investment Decision Making

Subjective confidence in a judgment is not a reasoned evaluation of the probability that this judgment is correct

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A set of rules to develop a behavioral edge – Part 6

  • by Rodney Smith
  • Posted on November 27, 2022November 28, 2022
  • Part 2: Human Foibles and Investment Decision Making

The strong bias toward believing that small samples closely resemble the population from which they are drawn is also part of a larger story

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A set of rules to develop a behavioral edge – Part 5

  • by Rodney Smith
  • Posted on November 20, 2022November 20, 2022
  • Part 2: Human Foibles and Investment Decision Making

Our mind searches for confirming evidence that we are right and shies away from contrary evidence.

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A set of rules to develop a behavioral edge – Part 4

  • by Rodney Smith
  • Posted on November 13, 2022November 13, 2022
  • Part 2: Human Foibles and Investment Decision Making

Herding. All stock market prices are both the cause and result of herding behavior amongst investors.

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A set of rules to develop a behavioral edge – Part 3

  • by Rodney Smith
  • Posted on November 6, 2022November 9, 2022
  • Part 2: Human Foibles and Investment Decision Making

Our gut needs training. Many of our instinctive feelings are the exact opposite of what we should be doing.

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A set of rules to develop a behavioral edge – Part 2

  • by Rodney Smith
  • Posted on October 30, 2022November 2, 2022
  • Part 2: Human Foibles and Investment Decision Making

It is very important not to fall into the attractive trap of extrapolating the most recent past into the future.

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A set of rules to develop a behavioral edge – Part 1

  • by Rodney Smith
  • Posted on October 23, 2022October 23, 2022
  • Part 2: Human Foibles and Investment Decision Making

Today everyone is fretting about inflation and the potential for a recession. Trying to decide on the outlook for these macro-economic things can be a distraction.

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Can we use heuristics to analyze a business?

  • by Rodney Smith
  • Posted on September 25, 2022September 28, 2022
  • Part 2: Human Foibles and Investment Decision Making

Adequate, though often imperfect, answers to difficult questions

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The inherently short-term nature of the investment management industry

  • by Rodney Smith
  • Posted on August 28, 2022August 29, 2022
  • Part 2: Human Foibles and Investment Decision Making

Market conditions are fixed only in part by balance sheets and income statements; much more by the hopes and fears of humanity; by greed, ambition, acts of God, invention, financial stress and strain, weather, discovery, fashion, and numberless other causes impossible to be listed without omission

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Quantitative vs intuitive in investing

  • by Rodney Smith
  • Posted on August 15, 2022August 15, 2022
  • Part 2: Human Foibles and Investment Decision Making

Human decisions affecting the future, whether personal or political or economic, cannot depend on strict mathematical expectation, since the basis for making such calculations does not exist.

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