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.
risk seeking
Want better returns? Forget risk. Focus on fear
In effect they acknowledge that going down the Capital Asset Pricing Model rabbit hole with Alice did not get them to Wonderland. Their solution is to go further down the same rabbit hole.
A Daniel Kahneman core achievement applied to investing
Consistent overweighting of improbable outcomes – a feature of intuitive decision making – eventually leads to inferior outcomes.
Coping with luck – good and bad
They must avoid the temptation to say that lady luck owes them one and take outsized risks
Luck and taking a flyer
The notions of coherence, plausibility, and probability are easily confused by the unwary.
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
A set of rules to develop a behavioral edge – Part 3
Our gut needs training. Many of our instinctive feelings are the exact opposite of what we should be doing.
The inherently short-term nature of the investment management industry
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
Fear and investing
The house of fear has many windows
The psychology of probability
Probabilities are at the heart of investing. We look at examples of our human frailties in assessing probabilities.
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