Tag Archives: Behavioral Finance

Most Investors Think They Are Contrarians

Here’s a link to a great article from Morgan Housel @ The Motley Fool about how investors tend to perceive themselves:

LINK: Everyone Thinks They Are Different

I would only partially agree that “contrarianism is the key to huge outperformance”. The size of your allocation is of paramount importance as well. At the end of the day, the market doesn’t care about your style or your philosophy. What matters is whether you win or lose, and if you live to fight another day. There are no ‘beautiful losers’ in this great endeavor – contrarian or not.

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Contrarian Investing – Emerging Markets Edition

I attended a number of panel discussions and seminars on the state of Emerging Markets at the JPMorgan Emerging Markets Corporate Bond conference last week.

I noticed two things in particular: (1) there did not seem to be all that many people in attendance, and (2) there were many South Americans.

Initially, it seemed strange to me that someone would fly 8 hours from Santiago, Chile to hear about their country’s corporate bonds (OK, fine, 4 days in Miami Beach is not a tough sell…). However, considering the brutal state of Emerging Market bonds and equities – especially Latin America – over the past year, it soon became obvious that many had made the trip to just clear their heads and get some group support.

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Kristaps Porziņģis, Knicks Fans and Behavioral Finance

In this post, Josh Brown delivers a mea culpa on behalf of Knicks fans regarding their initial negative reaction to their team drafting Kristaps Porziņģis.

Brown draws parallels to how we as investors anchor our perceptions and reactions to our previous experiences (availability bias). Moreover, he explains how we most often give into gut reactions that we presume to be logical and well thought out, when they are actually not (first level thinking -vs- second level thinking).

There are a few more things that I would like to add. Brown makes note of Knicks fans wanting to ‘win now’. This is not something that is exclusive to New York or to sports fans in general. Everyone wants to win, and they don’t just want to win ‘now’, they want to win all of the time. Investing is no different.

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