It’s that time of the year again, when avalanches of New Year’s resolutions are launched with idealistic plans for drastic self-improvement in 2016. We resolve to quit drinking, smoking, or both. We resolve to help others and to spend more time with our friends and…
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…
Chapter 1: You are What You Think “You are today where the thoughts of yesterday have brought you and you will be tomorrow where the thoughts of today take you.” — Blaise Pascal We can’t change other people and our…
Did you know that it is the default settings of our brain that often drive us—despite past experiences—to do things that make no logical sense, though they make perfect emotional sense? That, however, does not make us completely irrational; it…
We sometimes tend to think that ideas and feelings arising from our intuition are essentially superior to those achieved by reason and logic. As such, intuition—the good old “gut feeling”—has come to be idealized as the Noble Savage of the mind, fearlessly cutting through…
… the Framing Bias. This is another beautiful mental shortcut that we use to solve common problems. Although this heuristic speeds up processing in our brain, it occasionally makes us think so fast that we miss what is important. When heuristics work, they…
Have you ever been convinced that you could predict how well you would perform in any stock market situation? If the answer is yes, then you are suffering from the Dunning-Kruger Effect. What that effect literally means is that you are so bad at a…
In my earlier blog post, I asked which animal kills more people? Despite that the Hippopotamus emerged victorious; in truth, the animal that creates by far the greatest havoc to humankind is the Black Swan. How so? Because the most influential and devastating events in history…
Let’s talk about Habituation. Habituation is really just another trick that our inner con man plays on us: He makes us believe that wonderful things are especially wonderful the first time they happen, and that their wonderfulness wanes with repetition. “Psychologists call this effect habituation,…
Your answer might be a clear “Yes,” in case you have loads of money and zero concerns about it—EVER—being depleted. Congratulations! But in all other cases, I would recommend that you get yourself informed about how money (in general) and the stock market (in particular) work.…