What can behavioural finance teach investors about interpreting financial and economic data? My talk at the Royal Institution’s 14-10 Club offers some examples of behavioural biases from reporting by central banks, companies and fund managers. The talk and slides can be viewed or uploaded as a pdf from this Dropbox link.
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Tag Archives: confirmation bias
Do central banks ever check their forecasting record?
August 21, 2014 
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The best analysts work with what they know, and minimise forecasting. Assessing a company’s strengths and the price paid for shares usually beats making projections. So why, when it comes to the economy, is this discipline set aside? The Bank of England has now worked with forward guidance for more than a year, with little […]
Continue reading Deflation an unimagined world for investors
May 8, 2014 0 Comments
Experience drives what we recognise and forecast, but deflation is unfamiliar territory. Investors base analysis on what they know and understand; periods of stable or rising prices. But that is not the pattern now; Europe’s inflation outlook is steadily being revised down, but getting little attention. Even if the deflation risk is recognised, the problem […]
Continue readingDealing with underperforming managers
April 3, 2013 0 Comments
From CFA Inside Investing. Clients and their advisers see investment managers at their best in new business presentations. Data can be carefully selected for a pitch, or in a brochure promoting a fund. And, usually, investors have a preference for the style they would like in their manager; value or growth, momentum or contrarian. It […]
Continue readingBehavioural Finance Jan 2013
February 21, 2013 1 Comment
“Behavioural Finance & Investment” MSc in Investment Management, Heriot-Watt University 22 January 2013 Presentation by Professor Colin McLean I am going to focus on some practical ways in which behavioural finance can be applied day-to-day, and draw some conclusions about what we can do about psychology. I am not going to tell you to try […]
Continue reading5 key behaviours of underperforming managers
February 14, 2013 0 Comments
New UK research identifies 5 key behaviours of underperforming managers. In FAJ, Greg Richmond and Alistair Byrne explain what happens when managers underperform; loss aversion, confirmation bias, short time horizons. Based on interviews with many firms. Clients, advisors and fund managers themselves should read this http://t.co/WwXrQLc7
Continue readingBiases in analysing company reports
March 24, 2010 0 Comments
The company results season keeps analysts busy, with an avalanche of information. Indeed, more numbers are delivered than realistically can be analysed. Behavioural finance tells us that it is human to make mistakes in understanding all this data – but how can investors get the most out of all this company news? The problem is […]
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