In the previous post, I mentioned the notion of recency bias – that is, to assume that the only possible outcomes on offer are those you have experienced. Sadly, for your ego, the market existed long before you decided to take an interest, and it will continue long after you’ve lost interest. To bring the…
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Unfortunately, the human brain is not geared towards the world it has created. The software that runs our brains is effectively a Model T Ford trying to cope with being on an autobahn with an unlimited speed limit. As traders, we can both see and experience this every day. The current market turmoil has caused…
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In The Art of Uncertainty, renowned statistician David Spiegelhalter reveals how understanding risk and probability can help us make smarter decisions in an unpredictable world. From medical choices to artificial intelligence, he shows how data can clarify the unknown, helping us distinguish real patterns from mere coincidences. Through storytelling and real-world examples—including historic miscalculations and surprising…
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Fans of cinema will recognise the title of this post as coming from a speech by Marlon Brando in the 1954 classic On the Waterfront. The quote also applies to many traders who let opportunities slip through their fingers because of a lack of courage. Courage is rarely discussed in the context of trading, but…
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This article is behind a paywall, but you can get the general gist from the opening two paragraphs. If the pay of local fund managers were based on ability, the vast majority would be delivering newspapers to make ends meet. China is considering slashing pay of fund managers who underperform their benchmarks as part of…
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One of the most frustrating things in trading is the persistence of idiocy, which holds traders back. The chart below or a variation on it regularly appears on my social media feeds—generally posted by someone who trumpets the initial CMT or CFT after their name. I’ll tell you more about them in a minute. The…
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Imagine it’s ten years ago and you are assessing the relative merits of market cap weighted exposure to US equities and an equally weighted allocation. Across a range of valuation metrics you can see that the equal weighted index is moderately cheaper. As luck would have it you also have a crystal ball that tells…
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The modern world is full of risks, from natural hazards such as flooding to the existential threat of nuclear war, artificial intelligence and climate change. With the scientific and technological progress of the past few centuries, we’ve created new hazards that threaten our very survival and, in this series, emergency planner and disaster recovery expert…
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Hendrik Bessembinder’s latest paper asks the question – which US stock has generated the highest long-term returns?[i] The answer is Altria Group (formerly known as Philip Morris). Over 98 years the tobacco company produced a cumulative return of 265,000,000.00 percent! Based on this it would be easy to write about how lucrative it can be…
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