Category Archives: Psychology

Things Investors Should Hate 3/5: Innovation

I love innovation.  My entire career has been spent in technical innovation.  Even now I’m trying to replace the need for cash and credit cards by putting them on a cellphone.  But as an investor, innovation sucks. Unfortunately we’re attracted to … Read More

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Things investors should hate 2/5: Gurus

I”m not entirely sure what constitutes the entry qualification to be an investment guru. Intense self-belief and a complete lack of introspection, perhaps? The best analysts tend to be self-effacing, are often cautious in the face of uncertainty and usually … Read More

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Do banks really want customers?

Or would they rather just make money by themselves? We used to take banks for granted as places to store our money, and sometimes we borrowed money from them as well.  But recently it has looked like banks were getting … Read More

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Things investors should hate 1/5: Models

I don’t hate all models. I’m quite keen on the tall, leggy ones.  It’s the mathematical ones that come trailing clouds of false precision that are the subject of my ire.  Yet the world is a complicated place, too complex … Read More

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Mindless Money 5/5: Avoid Overspecification

The paradox of investing is that the best investors have a system, but that this system, mindlessly applied, exposes them to the very risks that they’re trying to avoid.  Markets go through phases, and systems and concepts developed during one … Read More

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Mindless Money 4/5: Stay Resilient, Be Prepared

Every so often in an investor’s lifetime the markets will throw us a completely unexpected curve ball.  Markets will fall off a cliff or soar off into the stratosphere. Whether we like it or not, if we invest in the … Read More

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Mindless Money 3/5: Hold the Big Picture

The key phrase here is situational awareness.  It’s about having the big picture as well as the focused analysis.  The world, even that part of it tracked by stockmarkets, is a complex adaptive system made up of many working parts.  … Read More

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Mindless Money 2/5: Don’t Oversimplify

Simplifying things is what we do, habitually.  The world is too complex, too multi-faceted for us to do anything else.  We develop a specific, individual mindset which we use to frame the world we operate in.  Sometimes this is a … Read More

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Mindless Money 1/5: Focus on Failure

Tim Richards is away, analysing the Eurozone crisis from the lofty vantage point of a Alpine bar. In the meantime this is a series of mini-posts on how to avoid the worst faults of the behaviorally compromised investor based around the … Read More

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A Tall Tale of Risk Aversion

Dead or Alive, It’s all the Same Amos Tversky’s and Daniel Kahneman’s 1981 paper on The Framing of Decisions and the Psychology of Choice demonstrated that people are risk averse in situations involving potential gains and risk takers in situations involving … Read More

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