Gentle Reminder of the Disposition Effect

Disposition Effect - Think about it

A few weeks ago, I wrote herewithin about a natural phenomenon: When things go well, we tend to ascribe our success to our abilities—our disposition.  But when they go wrong, we tend to blame external factors—our situation. Finished.  Done.  Quick conclusion.  Move on. But wait…

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The Seer-Sucker Illusion

seer-sucker illusion

“Imagine you pick 1 million random people from around the world every day,” said Toby McDade, chief investment officer of Momentum Fee Capital Management. “Some days, 51% would be in a good mood, 49% in a bad mood.  The next…

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Hot-cold-empathy gap

Have you ever asked yourself this: How can I control myself when I feel the irresistible need to break my rules about how to invest in the stock market? That question pertains to the “hot-cold-empathy gap”, where we say to ourselves in a calm…

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Neglect of prior base rates effect

tomorrow starts now; start an ETF savings plan

This is the tendency to fail to incorporate prior known probabilities which are pertinent to the decision at hand. Caution: Don’t read on if you are 40 years of age and above! Here’s an interesting question for the rest of you: Why aren’t more young people…

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My Dopamine determines risks of mine

dopamine molecule

Have you ever wondered why you can become revved up and an exuberant risk taker, when flying high, or hesitant and risk-adverse, when cowering from your losses in the stock market? We have the impression that it is our deliberative mind that makes the most important decisions in…

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