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Special Report on

Beat Your Investing Biases

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SUSIE GHARIB: When it comes to sports, most people root for the home team. And when it comes to investing, many people buy stocks in companies also on their home turf. This is called familiarity bias and some finance experts say it's not a smart way to invest. I talked today with one of those experts, Nicholas Barberis. He's professor at the Yale school of management, as we continue our series "Your Mind and Your Money." We began the conversation by talking about the most common mistakes that investors make. NICHOLAS BARBERIS, PROF., YALE SCHOOL OF MGMT: I think (INAUDIBLE) is something that ...
is a concrete metric that detects valuation bias or deliberate price manipulation of portfolio assets by a manager of a hedge fund, mutual fund or similar investment vehicle, without requiring disclosure (transparency) of the actual holdings. This metric measures abnormalities in the distribution of returns that indicate subjective pricing. The formulation of the Bias Ratio stems from an insight into the behavior of asset managers as they address the expectations of investors with the valuation of assets that determine their performance. The bias ratio measures how far the returns from an investment portfolio - e.g. one managed by a
Asset allocation: It's critical for investing. So why don't you do it?
As you know, I love mocking people who believe that we are “rational” and “logical.” These tend to be economists, engineers, and other people who are clueless about human behavior. One of the best ways to reveal the difference between what rational people “should” do and what real people actually do is to talk about rebalancing and asset allocation. Today, I want to demystify what most people think determines investor success…versus what actually matters. The reasons for investment success are not obvious. Most people mistakenly believe that your stock choices determine your success. In ... market research, surveys and trends
Beyond Greed and Fear: Understanding Behavioral Finance and the ...
In Beyond Fear and Greed, Mr. Shefrin has written a fairly interesting account of the advances in behavioral finance. He draws heavily on previously published research (although often published in fairly esoteric sources), so people searching for lots of new insights will probably be disappointed. That said, Mr. Shefrin covers most of the common biases that we are prone to including mental accounting, loss aversion, trend following and the like. If a reader doesn’t see him or herself in at least some of his illustrations, I suspect he is not being honest with himself. My major problem is that in some instances I think ... market research, surveys and trends


Investing Reality Check: Why You Think You're Above Average - CBS ...
Here’s an important question: How good an investor are you? Chances are, you think you of yourself as a money manager living in Garrison Keillor’s Lake Woebegon, where everyone is above average. As a financial planner, I’ve noticed that many individual investors feel this way. So does nearly every money manager, financial planner, and other pro. This illusion of superiority is troubling, since most investors who consider themselves above average have portfolios that earn less than they think. When I give talks about investing, I often ask audience members to raise their hands if they think they’re ... industry trends, business articles and survey research
Comment on CPI biases - response to article by Jim Klumpner in ...
Commenting on Klumpner's paper, Diewert agrees on the size of the substitution bias. The formula bias might be 0.5 percent per year rather than 0.1 to 0.3 percent. The outlet substitution bias may be larger than zero. Although adjustment for qualify bias is difficult, BLS does the best it can. New product bias is significantly larger than Klumpner estimates. Diewert concludes the total CPI bias is 1.3 to 1.7 percent per year. He adds that the statistical agencies should modify their procedures to deal with a rapidly growing number of commodities rather than simply measuring prices and quantities of a fixed list of commodities. industry trends, business articles and survey research
Just One ETF: Tying Fortunes to Broader Global Equities
Several times a week, Seeking Alpha's Jason Aycock asks money managers about their single highest-conviction position - what they would own (or short) if they could choose just one stock or ETF. Jason Whitby is senior financial advisor at Coconut Grove, Fla.-based Investor Solutions , a fee-only RIA. A CFP practitioner and CFA, he has spent more than 10 years in financial services providing planning and investment management for high-net-worth clients. Which single asset class are you most bullish (or bearish) about in the coming year? What ETF position would you choose to best capture that? If I could own just one stock or ... market trends, news research and surveys resources
US fund managers offer cheaper way to beat hedge fund biggies
John Hussman runs a $6.3 billion mutual fund with the flexibility to bet on rising and falling stock prices. His fees are a fraction of those charged by so-called long-short hedge funds that do the same thing, and he’s making more money for investors this year. Hussman Strategic Growth Fund climbed 2.35% through July 30, compared with an average decline of 1.22% for stock hedge funds tracked by Chicago-based Hedge Fund Research. Hussman is outpacing some of the most highly regarded stock-pickers in the hedge-fund world, including Maverick Capital’s Lee Ainslie, Andreas Halvorsen of Viking Global Investors and Mark Kingdon of ... market trends, news research and surveys resources


A Case for Active Quantitative Equity Investing
behavioral biases at work in equity investing, we can not only ... room for investment managers to beat the market return over the long term. .... Active Quantitative Equity Investing. This material is for your private information. ... technology research, surveys study and trend statistics
A surplus of positive trials: weighing biases and reconsidering ...
In this issue, Fries and Krishnan raise provocative new ideas to explain the surfeit of positive industry sponsored trials evaluating new drugs. They suggest that these trials were designed after so much preliminary work that they were bound to be positive (design bias) and that this violates clinical equipoise, which they characterize as an antiquated concept that should be replaced by a focus on subject autonomy in decision making and expected value for all treatments in a trial. We contend that publication bias, more than design bias, could account for the remarkably high prevalence of positive presented trials. Furthermore, ... technology research, surveys study and trend statistics
How to Beat the Crowd in the Stock Market
Charles Lee's portfolio management style requires accounting for human biases to nudge prices closer to their real value. by Maria Shao By now, the fallout from the epic financial crisis is both familiar and tangible: foreclosed mortgages, failed banks, lost jobs, recession. On the less tangible side, the meltdown also shook faith in a widely accepted economic principle: Markets are efficient. Since the mid-1960s, many academics have embraced the theory that prices paid in large public markets, such as those in stocks and bonds, reflect the collective wisdom of investors acting rationally on all available ...
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How do I start investing my money? | Ask MetaFilter
My New Year's resolution is to develop a grown-up financial plan for myself. What should I be doing in terms of investments? Please spare some financial advice for a total beginner. Some background info: I'm 29 years old, have a steady income and have managed (finally!) to amass some savings. Not a lot, but it's a start. For a number of reasons, I've never gotten financial advice from anyone. I bank almost exclusively via ATMs and online, and I now realize I don't know what I am supposed to be doing to make the most of my money. Beyond my savings accounts, right now my current "strategy" basically ...
Why are government budgets only one year at a time? | LinkedIn ...
Having been on the inside of the funding process in the government contracting industry (both large and small business) for over 40 years through many administrations and much frustration I can assure you that you have hit upon a major weakness in the huge machine we call the federal government. About mid-summer every agency begins to get paranoid about whether or not they have spent all their money, worried about having to return some and be cut back the next year. They flood the market with sources sought notifications and open solicitations to get the money committed. Many of these projects are meaningless. Then during the ...