Some biases are so pervasive that adjustment is hard; optimism is such a deep rooted aspect of investor psychology that its impact is usually missed. A recent book, Fish Can’t See Water, describes the way in which an aspect of the environment or culture is embedded so widely that it becomes invisible. Yet, though never […]
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Tag Archives: Optimism Bias
New Review of practical Behavioral Economics by Cass Sunstein
February 22, 2013 
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New insights on behavioural economics by Cass Sunstein of Harvard Law School – the co-author (with Richard Thaler) of Nudge. Applying real-world behavioural economics, using choice architecture and default rules to beat biases In September 2010 David Cameron established a Behavioural Insights Team, nicknamed the “Nudge Unit” to see how to make practical use of […]
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 readingOptimism Bias and the Illusion of Knowledge
January 2, 2012 0 Comments
Investors start each year determined to do better. With hindsight, last year’s mistakes always look obvious – surely we can learn from them. The second-half of 2011 was a dreadful period for small and mid cap companies, hitting most actively managed portfolios. Yet, history repeats; as with last year, the January effect has prevailed. Smaller […]
Continue readingForecasting biases; anchoring & optimism
January 28, 2011 0 Comments
The start of the year – while company results are awaited – is forecasting time. There may not be much fresh information, but analysts re-work their figures nevertheless. We get index forecasts for the year, new stock price targets and revised assumptions for commodities, currencies and interest rates. The calendar drives analysts’ output. Typically, optimism […]
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Behavioural Edge 