In the book Choices, Values, and Frames, Daniel Kahneman and Amos Tversky explain why investors need to make peace with their losses. Here’s an excerpt from the book: This analysis suggests that a person who has not made peace with his losses is likely to accept gambles that would be … Read More
Daniel Kahneman: How Often Should You Check Your Portfolio For Optimum Returns
In his book – Thinking Fast And Slow, Daniel Kahneman discusses how often you should check your portfolio for optimum returns. Here’s an excerpt from the book: The combination of loss aversion and narrow framing is a costly curse. Individual investors can avoid that curse, achieving the emotional benefits of … Read More
Daniel Kahneman: The One Question That Most Investors Can’t Answer
In his book – Thinking Fast And Slow, Daniel Kahneman says there is one question that most investors can’t answer in order to be successful. Here’s an excerpt from the book: Why do investors, both amateur and professional, stubbornly believe that they can do better than the market, contrary to … Read More
Daniel Kahneman: The Illusion Of Skill In Investing
In Daniel Kahneman’s book – Thinking Fast and Slow, he provides some research that exposes the illusion of skill in investing. Here’s an excerpt from the book: Some years ago I had an unusual opportunity to examine the illusion of financial skill up close. I had been invited to speak … Read More
Daniel Kahneman: Finance Professionals Are More Conducive To Overconfidence
Some years ago Daniel Kahneman and Gary Klein wrote a paper titled – Conditions for intuitive expertise: a failure to disagree, in which they explored the differences between two approaches to intuition and expertise that are often viewed as conflicting: Heuristics and Biases (HB) and Naturalistic Decision Making (NDM). Starting … Read More
Daniel Kahneman: COVID-19: It Could Take Several Years, But Ultimately Life Will Go On
Here’s a great interview with Daniel Kahneman speaking on the Politics And More podcast about the impact of the Coronavirus on society. Here’s an excerpt from the interview: For old people like me the prospects are not good. I see very little reason for optimism. I mean at the best … Read More
Daniel Kahneman: What Can All Investors Learn From Ray Dalio When It Comes To Making Better Decisions
Shane Parrish recently interviewed Daniel Kahneman on his Knowledge Project Podcast. During the podcast Kahneman reveals the actions we can take to overcome the biases that cripple our decision-making, damper our thinking, and limit our effectiveness. He also discusses what everyone, including investors, can learn from Ray Dalio at Bridgewater … Read More
Daniel Kahneman: The Illusion Of Understanding – Just How Lucky Were The Founders Of Google
Here’s a great passage from Daniel Kahneman’s book – Thinking Fast and Slow, in which he discusses the ‘Illusion of Understanding’, illustrated by the role that luck had on the founders of Google saying: The trader-philosopher-statistician Nassim Taleb could also be considered a psychologist. In The Black Swan, Taleb introduced … Read More
Daniel Kahneman: Can Investors Develop Expertise In Picking Stocks?
Here’s a great excerpt from Daniel Kahneman’s Keynote Address at the Amundi World Investment Forum – AmundiWIF19. Kahneman provides his thoughts on whether investors can develop expertise in picking stocks saying: Confidence & Expertise Can you develop expertise in picking stocks? This is very doubtful. In fact, it is probably not … Read More
Daniel Kahneman: The Trouble With Confidence
Here’s a great little video by Daniel Kahneman on the trouble with confidence. Kahneman makes the point that from a societal perspective confidence is generally very good, but from an individual’s point of view confidence is typically not always good. Here’s an excerpt from the video: Society rewards overconfidence. We … Read More
Daniel Kahneman: Investors Should Consider A “Regret Proof” Policy To Overcome Loss-Aversion
Here’s a great article from Morningstar in which Daniel Kahneman provides financial advisors with advice on how to better steer clients towards their investment goals using a “regret proof” policy. The policy could also be adapted by individual investors in managing their own portfolios. Here’s an excerpt from that article: Finding … Read More
Daniel Kahneman: The Illusion of Stock-Picking Skill
For the majority of stock pickers successful investing is thought to be based on some degree of skill. The truth is however that successful stock picking for most amateur and professional investors is due mainly to ‘luck’ not skill. Everyone knows investing is important, but it can also be overwhelming. … Read More
Is It Better To Buy The Stock And Watch The Price Drop Or Not Act And Watch The Price Soar? – Daniel Kahneman
One of the most common predicaments facing investors is that they’ve analysed a stock, it meets with the investors criteria, and now it’s time to pull the trigger and buy the stock. But something happens, the investor ums and ahs and delays the decision to buy. Next thing you know three … Read More
What Should You Do With Under-Performing Stocks That You’ve Held For A Long Time? – Daniel Kahneman
One of the greatest challenges facing all investors is what to do with those under-performing stocks that have been sitting in your portfolio for a long time. Most investors prefer to wait until the under-performing stock gets back to its original purchase price, then they’ll sell it. The problem is … Read More