So What About 2016?

Currently the media is awash for predictions for next year, some are optimistic, some are pessimistic and all are bullshit. The world would be a lot better off if idiots in financial markets who thought they could predict the future would just spontaneously self combust and leave the rest of us grown ups alone. So in keeping with this tradition here are my predictions for 2016.

Each of us will continue to be our biggest enemy. We will continue to be plagued by our various cognitive biases. We will anchor our emotions to a given price thereby giving us an excuse to not take our stops. In some ways this is a little like the bandwagon effect – if others are not selling then why should I. Our  need to defend our ego and the function of hyperbolic discounting will continue to make us take our profits far too soon, all because we value what we can get now rather than what we might get in the future. Due to the sunk cost fallacy we will continue to stick with everything from dud relationships to poor investments even when all indicators are that it was a really stupid idea. And to top it all off we will look for confirmation of our own stupidity at every turn. And because I have blindspot bias I believe that all of this applies to all of you but not me.

Trends come and trends go – the only thing that remains constant in our trading is ourselves and our own failings. In this game and it is a game the person who prospers is the one who realises that.