Does Wisdom of Crowds apply to earnings estimates, price targets, value estimates and stock prices?
The behavioral tail can wag the statistical dog
statistics
Random Walk fallacy in investing
The defining feature of randomness of a series of data is that each data event be independent from all other data events in the series.
The Law of Small Numbers for investors per Daniel Kahneman
The strong bias toward believing that small samples closely resemble the population from which they are drawn is also part of a larger story: We are prone to exaggerate the consistency and coherence of what we see.
Numbers, financial statements and things that can be counted but may not count
You know, Skippy, if all this bad stuff hadn’t happened, we would be having a pretty good quarter.
Investment in intangibles has wreaked havoc on the meaning of multiples
The majority of investments are in intangible assets, including research and development, customer acquisition costs and branding. But companies commonly expense these investments on the income statement as they incur them.
The curious advice to sell in May and go away
We are prone to exaggerate the consistency and coherence of what we see.
The Achilles heel of the quantitative analysis of stocks
Something that knocks the pins out from our normal understanding of price earnings ratios, return on invested capital, discounted cash flow analysis, smart beta/factor ETFs, value at risk models (VAR) and even company financial statements
A set of rules to develop a behavioral edge – Part 6
The strong bias toward believing that small samples closely resemble the population from which they are drawn is also part of a larger story
The search for a better guide to stock values
Can we improve on the accuracy of these estimates by obtaining estimates from, say, 22 leading investment banks and averaging them?
Quantitative vs intuitive in investing
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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