Behavioral Finance

Mind Games: 3 Behavioral Traits Investors Should Be Mindful Of

In “Bubbles and Elevators”, we discussed how human beings do seemingly ridiculous things to fulfill their instinctive need to mimic what others are doing, right or wrong, logical or illogical. The greatest investors, those that make money when markets are rising and avoid the pain when bear markets occur, are…

Investing Strategy 101: It Pays To Follow Your Process!

One of the earliest recollections from my start in the industry was an investing strategy founded by Michael O’Higgins called the ‘Dogs of the Dow’. The simplicity of buying high yield blue-chip companies lured in numerous investors and became quite the phenomenon in the early 1990’s. The premise of this investing…

Insights Into Investing Through Financial Bubbles and Elevators

Financial Bubbles and Elevators Volumes have been written on behavioral finance and the seemingly “irrational” decisions investors tend to make to avoid straying from the herd. This article examines a current example coined “FOMO” (fear of missing out), in today’s texting parlance. Through a better understanding of the psychological dynamics of…

Investor Skepticism Fuels Bearish Climate For Stocks In 2016

Investor skepticism is something that we hear about often in the stock market. More importantly, we feel it deep in our core. It is usually entwined with disbelief that a current trend can continue given a specific set of concerning factors.  Investor skepticism is also the reason that investing can…

SHORT-TERMism: Algos, ETF’s And Investor Performance

This post came over via Shane Obata and was written by Craig Basinger, Richardson GMP’s Chief Investment Officer. “The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett The only constant in the investment landscape is change. I would still classify myself…

The Importance Of Mental Flexibility In Trading

Possessing mental flexibility is essential for any trader, but it is especially important for short-term traders who constantly have to reevaluate the merits of their open positions. There is a constant barrage of data that must be interpreted and filtered intraday, and it is the job of a professional trader…

Why You Shouldn’t Let Market Bottoms Consume You

Calling for a market bottom is the new rage. But, truth be told, what feels cool is often a very dangerous thing to do (especially with your money). And that goes for calling market tops as well.  It’s a mentality that can consume you and affect your day to day…

Investors: Beware The Certainty Trap

Data availability is something of a double-edged sword in today’s financial markets. On the one hand, we now have a nearly unlimited supply of research, opinions, back-tests and historical simulations with which to base our investment views upon. On the other hand, the fact that we have more information available…

The Art Of Trading And The Illusion Of Control

I’ve written and said many times before that simplicity is a good thing—if you have a trading methodology that is overly complex, there’s a pretty chance it won’t work. However, many traders feel drawn to complexity—it feels right and good. Why is that? Why would we not prefer the simpler…