Investors love a good story, but the latest chapter of the emerging markets growth story has come as a nasty surprise to many. There may be much worse to come. Narratives can help to make sense of facts and figures. Stories can convey meaning, by joining up often unrelated information, and they offer hope. But […]
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Tag Archives: psychology
Should we worry about China?
May 29, 2015 
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Investors struggle with bubbles. Sure, we know they eventually burst, but lessons are quickly forgotten. Now China is a puzzle: it might look like a bubble, but what to do? Uncontrolled Yen devaluation could break China’s Renminbi peg and trigger more global deflation. But, timing and is hard to assess. Analysts and the press pay […]
Continue reading What can behavioural finance teach investors?
October 10, 2014 0 Comments
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.
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 reading Investors find it hard to escape Optimism Bias
December 3, 2013 0 Comments
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 […]
Continue readingDidn’t I do well? – Addressing Hindsight Bias
June 21, 2012 0 Comments
CFA UK Annual Conference. 21 Jun 2012. Investment managers should use journals, documenting their key decisions at the time they are made. There are good reasons for doing this, rooted in the findings of behavioural finance. We need to learn as observers of our own performance. And, I believe it can make all of us […]
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Behavioural Edge 
Why are commodities over-represented in indices?
Do investors have an outdate view of commodities? Far from helping to diversify portfolios, or representing a tangible way to benefit from economic growth, commodities have become volatile financial plays. A misguided view of the nature of these assets has resulted in them being over-represented in indices. Indeed, many passive investors may be surprised to […]
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