Have any lessons been learned following the Great Financial Crisis? Around the world, it looks like new bubbles are growing. Certainly, the crisis showed that central banks and politicians can move decisively on the threat of economic collapse. But the sequel has been years of bad policy; propping up banks, bad loans and unsustainable growth. […]
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Tag Archives: overconfidence
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 Investors should prepare themselves and their assets; not predict
January 6, 2014 0 Comments
Making an annual review of portfolios is good practice for investors. Unfortunately, January may not be the best time for this. The rosy glow of last year’s performance has too much emotional appeal, and the background noise of pundits is distracting. It is tempting to project market gains for the year, or to pencil-in likely […]
Continue readingInside investing on the Power of Portfolio Rebalancing
February 22, 2013 0 Comments
Good article by Gregg Fisher CFA on Inside Investing on the power of rebalancing portfolios. Simple rules can control behavioural biases; addresses overconfidence and the endowment effect. http://cfa.is/US419e
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 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 