The Winner’s Curse and Homo Investorus
The world does not operate in accordance with conventional economic or finance theory posited on the notion that people are both rational and selfish.
overconfidence
Investment strategy – the best defense is a good offense
And if a person sets out to make profits from security purchases and sales, he is embarking on a business venture of his own, which must be run in accordance with accepted business principles if it is to have a chance of success.
Danny Kahneman type risk policies for investors
Investor psychology can cause a security to be priced just about anywhere in the short run, regardless of its fundamentals
The Optimism Bias paradox
We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful
Self reliance at the heart of successful investing
If you always look to others for confirmation that you are right you will never be self-reliant.
The bitterest way to learn investing wisdom
If a man is both wise and lucky, he will not make the same mistake twice. But he will make any one of the ten thousand brothers or cousins of the original.
A set of rules to develop a behavioral edge – Part 7
Subjective confidence in a judgment is not a reasoned evaluation of the probability that this judgment is correct
Moderate risk tolerance
One way to be adept at avoiding failure is to avoid attempting anything you might fail at
The frailty of high conviction ideas
We need to have full confidence in our judgement about a company if we are to make a serious financial commitment to it. But, the strength of our belief that we are right has nothing to do with the validity of our judgement. And, if that sounds weird, blame it on behavioral psychology.
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