Investing Psychology Chapter 5: Why Even the Experts Get It Wrong
When we get sick, we go to a doctor. When something breaks, we call a professional. So when it comes to investing, we hand our money to financial experts. Makes sense, right?
Latest published articles
Product Design in Behavioral Finance
Chapter 7 of “Behavioral Finance for Private Banking” is about structured products. If you’ve never heard of them, don’t worry. Most people haven’t. But by the end of 2007, there were more than 340 billion Swiss francs invested in them in Switzerland alone. That’s 6.5% of all assets under management. Over 20,000 different structured products listed on the Swiss stock exchange.
The Danger of 'Risk-Free' Profits: Arbitrageurs (Chapter 17, Part 2)
When Arbitrage Breaks
In the second half of Chapter 17, Larry Harris explains why being an arbitrageur isn’t just about finding a “money machine.” It’s a risky business that requires massive capital and perfect timing.
The Follower Investor Type Explained - Behavioral Finance Chapter 9
Chapter 9 of Behavioral Finance and Investor Types by Michael M. Pompian introduces the Follower. And honestly, this one probably describes more people than any other type in the book.
Trading and Exchanges Chapter 7: What Brokers Actually Do for You (Part 1)
You open Robinhood, tap “Buy,” and 0.3 seconds later you own shares of Apple. Simple, right? But between your thumb tap and that trade actually happening, there is a whole chain of people and systems doing work for you. Chapter 7 is about those people. Brokers.
Hedge Fund Reference Checks: How to Verify Who You're Trusting With Money
Chapter 11 opens with a Reagan quote, “Trust but verify.” That pretty much sets the tone. You have spent hundreds of hours doing investment, operational, and risk due diligence on a hedge fund. But have you actually checked whether the people running it are who they say they are?
Investing Psychology Chapter 4 Part 2: Trust, Language, and the Social Side of Money
In Part 1 we covered how groups and social pressure mess with your investment decisions. Now let’s get into something even sneakier: how language, trust, and social networks warp the way we think about money.
Prospect Theory - How We Really Make Decisions
This is a retelling of Chapter 6, Part 2 (sections 6.7-6.9) from “Behavioral Finance for Private Banking” by Thorsten Hens, Enrico G. De Giorgi, and Kremena K. Bachmann (Wiley, 2018).
The Preserver Investor Type Explained - Behavioral Finance Chapter 8
Chapter 8 of Behavioral Finance and Investor Types by Michael M. Pompian introduces the first of the Behavioral Investor Types: the Preserver. And honestly, if you’ve ever been too scared to invest your savings because “what if the market crashes tomorrow,” this chapter is about you.
The Price Harmonizers: Arbitrageurs (Chapter 17, Part 1)
The Enforcers of Reality
In Chapter 17, we meet the Arbitrageurs. These are the traders who make sure the world makes sense. If gold is $2,000 in New York and $1,990 in London, the arbitrageur buys in London and sells in New York until the prices match. They are the “price harmonizers.”