Observations on
Psychology and the Markets
I wrote a piece earlier for stockcharts.com discussing home bias, which is the tendency for people to own companies that are located close to their home. One of the ways I suggested to combat this bias was to make sure to screen for stocks across markets and regions...
I recently listened to an interview with Rob Arnott from Research Associates entitled "Rob Arnott on Why Active Managers Fail." Despite its poorly worded title (Rob explains why some active managers do outperform, see below), it's definitely worth a six minute listen...
Back on February 17th, I wrote about the availability heuristic and breakouts that were happening in a number of index charts. As a review, if all you see are breakouts, I find it helpful to identify charts that look different...
"Be fearful when others are greedy, and greedy when others are fearful." -Warren Buffett
I run a scan on stockcharts.com for ETFs making 65-day highs and another for those making 65-day lows. Not surprisingly, today's low screen is full of commodities, energy, gold, oil, etc...
"It's better to be approximately right than precisely wrong." -unknown
I was listening to Barry Ritholz's interview with Professor Andrew Lo from MIT yesterday and I actually drove the long way home just to catch the end of it. What a fascinating discussion that touched on so many meaningful topics...
"Become more humble as the market goes your way." -Bernard Baruch
Thus begins a fantastic post by Ben Carlson over at A Wealth of Common Sense, all dealing with the psychological struggles of an investor in a bull market...
