DISQUS

ctreit · 1 month ago

There are a bunch of other psychological tricks our brains plays on us. You can read up on this stuff by searching for "Richard Thaler" on amazon. There you will find a few books from an academic who started work on behavioral finance early on, but these books are easy enough to understand so that the average person can also get the idea. I also found a book by Kahneman and Tversky on the first page of my search for Thaler. Kahneman got the Nobel price for his work in behavioral finance. (Tversky was dead when the prize was awarded.) - Now here is the tough part. Even if you know about these psychological failings (like I do), you still make mistakes (like I do).

Neal@wealthpilgrim · 1 month ago

This is really critical to discuss and to continue discussing.

Thanks.

What I find intriguing is that even though we KNOW we do this, we tell ourselves, "this time it's different" and then we end up shooting ourselves in the foot.....

Aaron Caldwell · 1 month ago

What a great blog post. Heavens knows we all get caught up in the psychological aspects of trading and are worse off because of it. I know I am guilty of being out of the market for this great run up after the precipitous fall. Missing out on this has been painful.

I'm wondering how one becomes a member of your blogroll?

Thanks!

Austin · 1 month ago

I only started investing a little over a year ago and I was amazed at how psychological it was.

I bought some individual stocks with some excess money after the economy went south because I wanted to test myself and see what it was like to own individual stocks and to deal with the day-to-day changes.

It was a great learning experience, but I quickly learned that day trading and watching CNBC all day was not my idea of a good time.

Great article, Flexo.

Save Money Hound · 1 month ago

Very insightful. I think sometimes we only want to see what we want to see. Emotions often cloud judgement and even though we know that it is affecting our financial decision making somehow it seems to have a greater pull on us than making a decision based on logic and reasoning. Heart over mind i guess.

Greg Retzloff · 1 month ago

Belsky and Gilovich's "Why Smart People Make Big Money Mistakes." is a very readable and practical introduction to behavioral finance. It references the work of Thaler, Kahneman and Tversky (mentioned above by ctreit) and explains the implications of their work for the general reader. The book also offers a valuable "what you can do about it" section at the end of each chapter.
And Aaron, my brother, you are guilty of nothing other than believing that market timing is a viable investment strategy. Belsky and Gilovich wrote their book for you. Good luck!