Are You In a Place for Some Feedback?

Previously, we discussed overconfidence and its dangers when it comes to investing and making financial decisions. In this post, we want to talk about some fairly simple things you can do to combat overconfidence. One of the best therapies for overconfidence is feedback. In a nutshell, feedback allows you to compare what you thought would happen with what actually happened. In some cases, life can give us feedback immediately. For example, you touch a hot stove, you get burned—quick feedback. The world of sports can provide immediate feedback as well. In basketball, when…Read more

The Wrong Kind of Contrarian

Well, this chart pretty much says it all about human beings not being naturally inclined to make good financial decisions.  For those of you that don't like charts, I will summarize - individual investors are prone to sell when they should be buying and prone to buy when they should be selling.  Over the last several years, as stocks have been rising, individual investors have been pulling funds out of stocks (yes, those outflow numbers are in billions!). Click here for the full article in the Wall Street Journal.Read more

I’m An Excellent Driver

We often misjudge ourselves and overestimate our abilities. In a word, we are overconfident. If you are confident that you are not overconfident, then I would suggest that you might want to keep reading! One of my favorite examples of overconfidence was a survey where a group of people was asked to rate their driving abilities. Approximately 90% of the respondents rated themselves as above average drivers! It doesn’t take a Ph.D. in statistics to know that this is statistically impossible (unless, of course, you live in Lake Wobegon). In Why We Make…Read more

Slow – Facebook Ahead

Currently, Facebook is the hottest and most in demand IPO we have seen for some time. In my experience, the hotter and more “in demand” the investment opportunity, the more inclined we are to fall prey to some common investment mistakes. Why? Because one of the keys to not making mistakes is to pause, take a deep breath and then pause again! In other words, we need to be deliberate and thoughtful. But with hot stocks like Facebook, we tend to get excited and throw caution to wind and go with our gut.…Read more