investor psychology

While most funds focus on making money, picking good stocks and finding winners, few focus on avoiding the traps that end in permanent capital loss which is the real risk of investing. Show More

People often ask Steve Johnson, ‘what’s your edge? What do you do differently that allows you to outperform?’ His answer is straightforward: “we don’t have a big team, we don’t have an informational edge, we are not smarter than the people we compete against.” What they can do though, is... Show More

My advice has been consistent over the years: get your portfolio allocation right and let us worry about the timing. It’s fair to say it’s a piece of advice widely ignored. Show More

For those who fear flying, facts and statistics are likely of little help. But flying has become a lot safer over the decades. The number of incidents for every one million departures has fallen from 50 in the 1960s to less than one in 2016. Show More

The iconic value investor, and CEO of $27 billion hedge fund Baupost, Seth Klarman, has lived and breathed markets for 35 years. Today he’s nervous. Here are 6 warnings from him that you should keep in mind when investing today. Show More

If you’ve ever walked away from a property auction shaking your head in disbelief, you will know that emotions can get the better of investors. As rational as we may be, greed and fear are a powerful force that can hijack even the best-laid plans - “I won’t pay more... Show More

Risk Management is a key part of our framework at Morphic Asset Management. In today’s post, Morphic’s head of Macro and Risk, Geoff Wood, discusses five essential steps in their risk management process. Show More

Jason Zweig from The Wall Street Journal recently spoke with author, professor, and Nobel Memorial Prize winner Daniel Kahneman, for a brief but interesting interview. In sharing the interview, Zweig has also dipped into his extensive archive of prior interviews and articles – enough to keep even the most ardent... Show More

I read Howard Marks’ “The Most Important Thing” last year and it really resonated with me. Lots of books teach you how to 'do' investing, but Marks teaches how to think about investing. One of the key messages that’s stuck with me has been that achieving outperformance isn’t easy; it... Show More

In the upside-down world logic that applies to much of investing, there are a bunch of mistakes investors often make which makes it harder for them to reach their financial goals. Many of the mistakes investors make are based on common sense rules of thumb that turn out to be... Show More

It’s an inconvenient fact of life that smart people often do stupid things – just ask investors in Long Term Capital Management, the most infamous hedge fund blow-up of the 90s. Morgan Housel from the Collaborative Fund has a couple of suggestions as to why this happens. 1) “Intelligence increases... Show More

Herding is in evidence all around us: in business, in the consumer world and particularly in investing. But why does herding happen? And why do herds often form on the basis of such little information? The answers can be found in something called social proof. Social proof is when people... Show More

More and more, the old axioms of rational, efficient economic markets have given way to admissions of irrational behaviour pervasive in world markets. Short term price momentums are common, bouts of extreme volatility have become more frequent and a herd mentality has insidiously taken hold of the investing psyche. As... Show More

Most investors would be satisfied with a 6 out of 10 hit rate on their stock picks. Simon Shields and Shane Fitzgerald from Monash investors say they have been consistently hitting 8 out of 10 and share a few key ingredients to their success. A core focus of their process... Show More

Rudi Filapek Vandyck from FNArena shares his #1 rule for a ‘bear market’. “Have cash. Because without cash you can’t take advantage of opportunity. Sitting in stocks and hoping for the best is usually not a good thing. If you have cash you can actually make use of the fact... Show More

Peter Lynch, the former Fidelity investment legend, once said: “Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and mutual funds altogether.” Warren Buffett was just as forthright: “Unless you... Show More

"To help investors deal with their potential for “human error,” this shrink would prescribe a number of elements that can help with the task. The first essential element in coping with markets’ irrationality is understanding. The importance of psychology and its influence on markets must be recognized and dealt with.... Show More

The world is incredibly complicated. We are constantly being presented with new information and we have to subconsciously process it all as quickly as possible. In order to do so, our brain uses shortcuts – which we call heuristics and biases. While these mental tricks are incredibly useful and accurate... Show More

Analysing stocks and valuing companies is one thing. Having the right psychological makeup to buy and sell at the right times is a more important (and unique) skill set for the successful investor. In this video, Forager provides an introduction to this most important of topics - The Psychology Pittfalls... Show More

Ben Griffiths, Portfolio Manager at Eley Griffiths Group, says the single most difficult aspect of investing is knowing when to sell. To this day he says it is an art that he is still trying to master and one that he believes few investors execute well. “I can’t remember the... Show More