Category: Investor Behavior Modification
Investor Behavior and Modification
-
Resolving Conflicts with Relative Strength
In “Relative Strength can be a source of conflict for Tactical Traders” I explained how two different momentum indicators are in conflict with each other and can lead to conflict in tactical trading decisions. Tactical traders… Read More
-
Relative Strength can be a source of conflict for Tactical Traders
Relative Strength can be a source of conflict for Tactical Traders. I was talking to another tactical trader who manages a hedge fund. He said: “Industrials are a leading sector, but it’s overbought”. Relative Strength is… Read More
-
How Future Losses Erase Prior Gains
Someone was talking about how much the stock market is “up”. However, it’s the exit that determines the outcome. When someone talks about being “up” that doesn’t mean anything unless they have sold to realize… Read More
-
March 9th is the Bull Market’s 8-Year Anniversary
I observed many headlines pointing out that March 9th is the 8th anniversary of the current bull market in U.S. stocks. The rising trend in stocks is becoming one of the longest on record. It… Read More
-
You want to be fearful when others are greedy?
“You want to be greedy when others are fearful. You want to be fearful when others are greedy. It’s that simple.… ” – Warren Buffett Investors are emotional and we can profit from it. Though… Read More
-
Asymmetric Volatility Phenomenon
In Asymmetric Volatility, I used the range of weather temperatures to show that volatility is how far data points are spread out. While it’s 72 degrees and sunny in Florida it can be below freezing in… Read More
-
I always say that you could publish trading rules in the newspaper and no one would follow them. The key is consistency and discipline. Almost anybody can make up a list of rules that are 80 percent as good as what we taught people. What they couldn’t do is give them the confidence to stick to those rules even when things are going bad.”
– Richard Dennis Read More
-
Investors feel and do the wrong thing at the wrong time…
Many studies show that investors have poor results over the long haul including both bull and bear markets. For example, DALBAR has been conducting their annual Quantitative Analysis Of Investor Behavior study for 22 years now. DALBAR’s Quantitative… Read More
-
Systems trading is ultimately discretionary. The manager still has to decide how much risk to accept, which markets to play, and how aggressively to increase and decrease the trading base as a function of equity change. These decisions are quite important – often more important than trade timing.”
–Ed Seykota in Market Wizards: Interviews with Top Traders By Jack D. Schwager Read More
-
Essence of Portfolio Management
“The essence of investment management is the management of risks, not the management of returns. Well-managed portfolios start with this precept.” – Benjamin Graham The problem is many portfolio managers believe they manage risk through their investment selection.… Read More