We all make choices every day. Most are made instinctively and are not that high stakes. Some are incredibly high stakes yet are still delivered by and large subconsciously, driving, for example.
We all have an inbuilt system.
This is unpacked fantastically in Daniel Kahneman’s book ‘Thinking Fast and Slow.” Please read it!
Most errors in Judgement are made through the design of one’s machinery of cognition rather than the corruption of thought by emotion.
Not Answering or thinking about the right question laid out before you is a typical way people make errors of judgement.
When asked, should you invest in Tesla stock? For example, most will think, ‘do I like Tesla, Elon must or the company?
It’s the question asked that will always determine the answer given. We translate things to the easy answer, not the accurate one.
The key is, asking the right questions, which is why we developed the ebook you can download here:
The illusion that we understand the past fosters overconfidence in our ability to predict the future. We experience this all the time at Forensic Finance when in final consultations with clients, it can often be cathartic for someone to let go of past experiences to clear a path to recover a poor-performing portfolio.
Another great tool we gained from Daniel’s book is the pre-mortem: Yes Pre
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The use of Statistical analysis is a cornerstone of investment strategies across the world. Using statistics to prove or disprove a point in a debate or political argument is commonplace. Without exaggeration, I have sat in hundreds of presentations from investment fund representatives and managers covering every asset class you can imagine. All of them will produce back-tested data that statistically proves their investing method is a winner.
Published On: October 17, 2022Categories: Emotional Investing, PlanningMany people delegate their investment choices to others they have already carried out a risk assessment with, their broker. However, it would be a good idea to understand how much risk the money you have worked so hard for is exposed to daily. You may be unpleasantly surprised.
Published On: October 8, 2022Categories: Emotional Investing, Evolving, FinanceThe sunk Cost Dilemma is a formal economic term that describes the emotional difficulty of choosing whether to continue with or abandon a given project or endeavour.
In this article, we intend to highlight some factors that WILL affect your investment outcome. We have come across countless amounts of savers and investors that are unaware of this or believe it does not impact them.