Behavioral Finance

Investor Sentiment Update and Outlook: 5 Charts

The much awaited and widely predicted correction (that no one really ended up predicting) has turned 2 weeks old now, and driven the S&P 500 down almost -12% top to bottom. So it’s timely to take a snapshot of where market sentiment is sitting across a number of key indicators…

4 Prevalent Investor Biases And How To Manage Them

If you had to analyze every decision you make on a given day, you probably wouldn’t get much done. You might not even make it to work. Once awake, analyzing whether you should brush your teeth first, then shower then shave or change the order would surely slow down your…

S&P 500 Market Outlook: Investors In Celebratory Mood

In this week’s investing research outlook, we discuss current trends and indicators for the S&P 500 Index (INDEXSP:.INX), while checking in on investor sentiment and market breadth. We’ll also discuss current investing themes and news that we are watching as 2018 kicks off. Key Takeaways for the week ending January 5, 2018: Sentiment…

Investors: The Dangers Of Performance Chasing

The most prevalent disclaimer in the investments world goes something like this – “past performance may not be repeated”. If you don’t believe us, just read the disclaimers from investment firms, including ours. Despite the prevalence of this disclaimer, investors often place the lion’s share of their decision making process…

Behavioral Bias: How Investors Can Profit From It

All investors make errors that can often be traced back to a behavioral bias or emotional mistake. If under certain circumstances these mistakes are systematic, then it is not a stretch to believe we can develop systematic strategies to profit from them. After all, this is the essence of active…

Bull Market Cycle Update: Let The Good Times Roll?

The amount of resources thrown at trying to develop rules or models to predict turns or direction is truly immense. The problem, though, is that the financial markets are more of a social science given the number and behaviour of participants. You simply can’t solve for ‘x’. And even if…

Contrarian Investing: The Pains, Gains, and Takeaways

Contrarian investing has always been a fascination of mine. From the first time I read Humphrey Neill’s classic book The Art of Contrary Thinking, I’ve been watching magazine covers, newspaper headlines (above the fold, of course) and anything else that can suggest what the masses are thinking. In case you’ve never tried…

The Sun Shines For Solar Stocks

I regularly screen for ETFs making new 13-week highs or 13-week lows. This can help to identify emerging leadership before the move has already played out. This week’s new high screen yielded three results: iShares MSCI India Index ETF (INDA), Robo Global Robotics and Automation Index ETF (ROBO) and Guggenheim…

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…