Behavioral Finance

The Obligatory Investing Lesson From Blade Runner


This title is not a joke.

Smarts Won’t Save You


Anyone and everyone is prone to common investing mistakes. 

When Not to Trade


Election-night volatility led to wildly incorrect market forecasts, showing the folly of trading around major news events.

Your Chief Enemy Today Is Likely Yourself


Volatile swings like those that followed Thursday night’s Brexit vote aren’t a call to action. They are a call for reason.

Investing’s Timeless Challenge: Patience


Saturday marks one year since stocks last hit a record high. Here is how to think about this.

The Maddening Mr. Market’s Favorite Trick


Stocks’ recent upturn isn’t abnormal.

False Fears of a False Dawn


Stocks’ rally since February 11 is built on fundamental support, not sand. 

Beware Breakevenitis


We figure few investors bought stocks expecting flat returns, but after negativity some nevertheless fall prey to behavioral errors and sell at breakeven.

Dry Powder Doesn’t Pay


Waiting for a correction to buy stocks is a fruitless exercise.

Don’t Sweat Sideways Stocks


Sideways markets are often frustrating, but stocks can move quickly—make sure you’re ready.

The Missing Lesson: Unfriend the Trend


Beware forecasts that simply extrapolate the year’s start forward.

Funds Behaving Badly


Discipline is still the key to investing success.

All Over the Map on Europe


The media’s opinions on eurozone stocks run the gamut. What are investors to make of it all?

Upside Risks Are the Riskiest


For long-term investors, upside market risk has forever been the most dangerous risk. 

Silver Linings


Everyone makes mistakes in their portfolio. The best investors embrace their foibles and learn from them. 

MarketMinder’s 2015 Not-Exactly-Annual Portfolio Guide


Here is our not-exactly-annual guide to thinking about your portfolio as the Earth embarks on another trip around the sun.

Vexing Volatility


What can investors take away from December's swings? 

Amid Volatility, Beware Your Inner Investing Demons


With volatility up, investors should be conscious of how their brains may blindside them.

Putting Stocks’ Zigzags in Broader Perspective


It has been a bouncy start to October, but equity investors must focus on longer time periods than seven trading sessions.

Going Against the Flow?


Does it matter that stock ownership, by one measure, was at near-record lows 18 months ago?

Corrective Behavior


How should investors prepare for a possible correction?

No Easy Bull


What should investors make of recent chatter that the “easy money” days of the bull market are done?

You Get What You Pay For


Index funds have many fine features, but they can’t help investors fight the biggest stumbling block to long-term success: emotion.

Momentum and Other Fake Market Forces


When headlines predict big short-term moves, long-term investors should stay cool.

Flash Bang Boom!


China’s recent “fat finger” error may have investors concerned about flash movements, but their overall impact on performance is overstated.

Assessing Acrophobia


As several popular indexes have surpassed their past peaks recently, market acrophobia—fear of heights—seems to have increased dramatically. But bull markets don’t share our earthbound proclivities.

Market May I?


Markets don’t move on Mayan calendars, astronomy or folklore—so we have a hard time seeing why they should move just because it’s May.

Emotional Nevolution


A new study shows behavioral pitfalls have hindered investors since the dawn of equity markets. How can we fight our emotions?

Costly Clarity


Investors attempting to wait out current market volatility are likely taking more risk than it’s worth. 

Corrective Action


Understanding and separating the negatives from the positive realities can help guide your investing decisions.

The Politics of Fear


White-hot, fear-based rhetoric is flying around the debt ceiling as politicians try to sell their positions. And, some links.

Not So Breaking News


A primary risk to investors is overemphasizing something old or wrong.

A Not So Trivial Quiz


The very human tendency to fixate on negative events is a behavioral trait that doesn’t serve investors well.

April Showers Bring May Myths


May has arrived, and along with it, the often-repeated investing  advice to sell and go away.

Checking the Inner Gut Strategist


Economic growth and positive market returns continued in Q1 2011. But what of investor sentiment?

Don’t Fool Yourself


Year after year, crises come and go, and the market carries on.

It’s Not What’s Possible That Counts


Two events Friday highlight why investing based solely on what’s possible is wrong.

Indicator Acrophobia


Investors should take a cue from stock markets and ignore when indexes hover at round number thresholds.

Troubles on Emerald Isle?

Euro-jitters returned after an Irish debt downgrade—but a successful auction and generally healthier financial system show Europe's doing just fine.  

Feelings and Other Tragedies

Most Americans feel like their portfolios haven't grown over the last year. But feelings are often completely wrong.

The Baby-Talk Indicator

Consumer confidence reminds us what the stock market already indicated and is not a good predictor for future stock returns.

It’s Just the Opposite

In bad times, stocks are commonly shunned as permanently damaged goods—history shows no such thing.

Treasuring Treasuries

Major holders of US government debt aren't about to abandon this important market.  

Time for the Bloodletting!

What do you get when you combine the subprime mess with recent hedge fund debacles? An archetypal regret-shunning hootenanny!

Zigzags and Wild Polygons

Stocks have experienced some downward volatility of late. Times like these call for yogic breathing and maybe a little energy work.

A Question of Semantics

The question of "correction” vs. "bear” is really a question of semantics.

America for Sale

Fears surrounding foreign governments' investments in US firms is unwarranted. Capital is capital—the freer it flows the better.

Top Market Stories of 2007

A look back at the top market stories of 2007.

Groundhog Day 2008

Many of the market gurus have made their 2008 stock market predictions. Before making your own, we'd advise some critical thinking and skepticism.

You Call that Volatility?

There's nothing unusual or alarming about recent market volatility. Though we may not remember it this way, market volatility is normal and should be expected.

Odds On

Those looking for the "odds” of a recession are barking up the wrong tree. Economies are not games of chance.

Feel the Flow

Investors dread decreasing home prices will translate to lower net worth and slower consumer spending. But the Federal Reserve's latest report on the US household reveals the largely unappreciated strength and vigor of the American consumer.

Recession Quiz

Folks seem to believe the US is headed for a recession. We'd bet most of those folks would fail our quiz.

Proof of Theory

Investors would be wise to abandon theories and stick to the facts when making portfolio decisions.


Acts of terrorism are vile, tragic and significant. But they've accomplished little in the way of decimating the free-market capitalist economies of the west, which today thrive at a near unprecedented pace six years after 9/11.

They’d Rather Be in the Casket

A recent survey shows folks fear an impending credit crunch more than the specter of terrorism. Meanwhile, T-bill rates are climbing back toward the Fed Funds rate—both very bullish signals.

Who Wants to be Normal?

When you were young, did you dream that one day you would grow up to be fairly normal? Maybe you really set your sights high and hoped to live an amazingly average life? No? We didn't think so.

High Comedy

All joking aside, a good sense of humor is vital for investing success.

Height Fright

New market highs trigger an instinctual, but potentially dangerous, reaction in investors—fear of heights.

Revisionist History

Russia's attempt at revisionist history is a classic example of a common investor bias.

Danger: the Only Safety

Stock market history features a litany of dangerous ideas and thinkers in the quest to know what others don't.

Buyback Bonanza

Well, here we are, midway through June.

52 Card Pick-Up

Two brothers, ages ten and four, are killing time on a lazy Saturday afternoon.

I Can Has Cheezburger?

More than awkward grammar and poor spelling, that odd phrase is (perhaps regrettably) a rapidly spreading meme.

Loopy Mind Models

Mind-bending doesn't begin to describe it.

Obsessing Over Black Swans

These days there just isn't a lot of big news.

A Perverse Fantasy Life

Most of life is fantasy.

Stay in May

Here it comes.

Demand? No Such Thing.

Equity prices are ultimately determined by basic supply and demand.

Anchors Away

The streak is over.

Jelly Bean Investing


"Facts are meaningless. You could use facts to prove anything that's even remotely true!" says Homer Simpson, one of our favorite sages. Rarely has such wisdom come from one so yellow and two-dimensional.

This Ain't a Scene…it's a (Cognitive) Arms Race

Why are free market-based systems the optimal framework for an economy? One way to understand it is through the brain's evolutionary composition.

New Century, Old Worries

Have you noticed how quickly theories about the current market correction are being spawned then subsequently abandoned? We went from China, to the carry trade, to hedge funds, to the new "Daylight Savings Y2K", to subprime lending all in about two weeks.

To Seek The Grail

"Whoso pulleth out this sword of this stone and anvil is rightwise king born of all England.

Stone Age Forecasting

Do you know Abbey Joseph Cohen? How about Richard Bernstein? If you're an enthusiastic investor who follows the popular press, you probably do.

Fun With Numbers

  • Over 100 million Americans drink coffee every day…that's over 36.5 billion cups in a year! At about 50 beans per cup, that's over 1,825,000,000,000 beans a year! At that rate, how could we possibly hope to re-grow enough beans for the next year's brew? It's too much of a strain!

When Good is Bad

The mission of most investors is to find the best companies to put their money into.

I ♥ Investing

Around here we always say "your brain can trick you.

How Big is Big? Part II

Yesterday in this space we talked about framing and understanding how big big really is.

How Big is Big?

Is this a big number? $87,000,000,000 What about this one? $2,900,000,000,000 Are they both big? Is one big and the other bigger? Surely they couldn't be small! Ponder that for a moment…we'll get back to it.

Knowing and Understanding


- What I cannot create, I do not understand.

- Science is a way of trying not to fool yourself. The first principle is that you must not fool yourself, and you are the easiest person to fool.

Hawkish Behavior

Nobel prize-winning economist Daniel Kahneman is at it again.

Avoid Some Yearend Pitfalls

If you're like most people, you're probably indulging in a bit of yearend introspection as 2007 approaches.

Brain Discord

We have to live with ambiguity and discord every day.

Standard of Misconception

We aren't going to wax political, or even philosophical, on income inequality or standard of living inequality in the world.

Reckless Teen Investors

Sharon Begley's science column in today's Wall Street Journal is an insightful look into the psychological underpinnings of reckless teen behavior.

North Korea Can't Nuke Stocks

Fears are rising around the world over the purported testing of a nuclear weapon in North Korea.

What Happened to the Big Storms?

Here we are in mid-September of 2006 and not a single hurricane has made landfall in the US.


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