Category: Investor Behavior Modification
Investor Behavior and Modification
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Diversification Alone is No Longer Sufficient to Temper Risk…
That was the lesson you learned the last time stocks became overvalued and the stock market entered into a bear market. In a Kiplinger article by Fred W. Frailey interviewed Mohamed El-Erian, the PIMCO’s boss,… Read More
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Illusion of Control
“The illusion of control is the tendency for people to overestimate their ability to control events; for example, it occurs when someone feels a sense of control over outcomes that they demonstrably do not influence.”… Read More
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This is When MPT and VaR Get Asset Allocation and Risk Measurement Wrong
I was talking to an investment analyst at an investment advisory firm about my ASYMMETRY® Global Tactical and he asked me what the standard deviation was for the portfolio. I thought I would share with… Read More
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Tomorrow’s Newspaper: the Future, Part One
People often ask me questions of the future. I guess they figure I have such a strong track record, I must know something about the future. I paused my time machine, the rest of the… Read More
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Stock Investors Even More Bullish While Japan Falls into Surprise Recession
Following up with Are investors getting overly optimistic again? I pointed out that investor sentiment as measured by the AAII Investor Sentiment Survey had shifted to a point of unusually high bullishness. After prices trend up,… Read More
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The Mistake is Not Taking the Loss: Cut Your Losses and Move on
One of the keys to managing investment risk is cutting losers before they become large losses. Many people have difficulty selling at a loss because they believe it’s admitting a mistake. The mistake isn’t taking… Read More
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Are investors getting overly optimistic again?
Just as I was observing U.S. stocks getting to a point that I would expect to see stock indexes pull back at least a little or drift sideways, I noticed that investor sentiment readings last… Read More
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Markets don’t always react the way investors expect, so I focus on what is actually happening
I noted the below question and answer between Jack Schwager and Ray Dalio in Jack’s book “Hedge Fund Market Wizards: How Winning Traders Win” (2012). Ray Dalio is the founder of Bridgewater, the largest hedge… Read More
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Extreme Fear is Now the Return Driver
A professional investment adviser recently passed along some materials and asked for my opinion about a “tactical model” offered by another money manager. I was surprised that they expect great results from their model when… Read More