Ironically, the four faces of risk reverse actual risk. Risk is perceived to be highest in bear markets; moderate in sideways markets; increasingly lower in bull markets; and, more or less ignored, in bubbles.
The professional money managers would have been further ahead to simply pick stocks from their portfolios at random to sell, rather than making the ‘human’ sell decisions they actually made. They should have used darts rather than their brains.
It is difficult to accept uncertainty. It is tempting to try and escape it by kidding ourselves and each other, but that is liable to land us in greater difficulties.
We are prone to exaggerate the consistency and coherence of what we see.
Investor psychology can cause a security to be priced just about anywhere in the short run, regardless of its fundamentals
We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful
Each post has a list of what Daniel Kahneman, a Nobel Prize winning psychologist, calls risk policies and I call gap-to-edge rules.
Here were financial people who could seriously consider stocks less safe because they have declined in price
The most successful sailors are those who have a particular mindset in how they deal with the setbacks.
Really wonderful companies will often get overpriced and selling means losing a position in a first-rate company.
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