The results of a recent poll by the CFA Institute exhibit interesting findings regarding our bias towards ownership – the so-called Endowment Effect. A full 84% of respondents indicated selling is tougher than buying. The most emotionally taxing decisions are outright sales (43%) followed by short sales (41%). Buying on margin (13%) came in third. [...]
Our caveman ancestors had a simple test for survival – Fight or Flight. In our modern world money is the source of survival. As a result every primitive survival and pleasure-seeking drive is intensely focused on capturing and guarding money. These drives are involuntary and highly emotional emerging more quickly and forcefully than logical analysis. [...]
It’s been a while since we’ve yelled at those darn kids to stay off our lawn so it’s time to complain: What was up with all the gasbags on Friday? Great Britain voted to leave the European Economic Union and with nary a thought appeared article after article proclaiming to know what it means and [...]
“Those who cannot remember the past are condemned to repeat it.” George Santayana (The Life of Reason – 1905) At yesterday’s press conference Fed Chair Janet Yellen admitted what many suspect – the U.S. economy will not soon return to normal. For years The Fed’s projections have been overly optimistic. In-house economists predicted economic activity [...]
"And the young, they can lose hope ‘cause they can’t see beyond today. The wisdom that the old can’t give away." - Eddie Vedder The above lyric comes from the Pearl Jam song Love Boat Captain – a song lauding love for ourselves and our fellow (wo)man as the one constant that helps us deal [...]
If a tree falls in the woods does it make a sound? If a portfolio is consistent will anyone notice? Many investors claim to believe in asset allocation while maintaining a long-term outlook. Data shows otherwise. The 'buy high - sell low' approach has always been a bane to investors who let their emotions get [...]
One of the most challenging things for many of us to grasp is that prices do NOT indicate value. Why do we use prices as the standard of value? Because prices are easy to understand. It’s the reason a 5-star fund is “better” than a 4-star fund, why a 5-star Uber driver is “better” than [...]
Next week as part of his final budget request President Obama will propose a $10/barrel charge on oil. The fee would be paid by oil companies which of course means it will be paid by consumers as surely the oil companies will pass along the cost to end users. The fee’s purported goal is thievery [...]
What’s one way so many retail investors sabotage their savings plans? Recency bias. It’s that ugly state of mind where views are most heavily influenced by what we have experienced most recently. It impedes our ability to see the big picture. We lie to ourselves if we think we’re immune. “How did my investments perform [...]