Investing Psychology Chapter 4: Keeping Up With the Joneses (Part 2)
Picking up from Part 1 of Chapter 4. We know that groups are dangerous. Now let’s look at how the way information is “framed” changes how we spend our money.
Mental accounting
Mental Accounting Bias: Why Your Brain Puts Money in Invisible Buckets
Here is a question for you. You find $500 on the street. Same week, you get a $500 check from your mother as a gift. Is this the same money? Logically, yes. A dollar is a dollar. But here is the thing: most people will treat these two amounts completely differently. The street money? Easy come, easy go. Let’s spend it on something fun. Mom’s check? Better save it. She said it was for a rainy day.
Investing Psychology Chapter 2 Part 2: Emotions, Black Swans, and Getting Nudged
In Part 1 we talked about overconfidence, loss aversion, and the disposition effect. Now let’s keep going with the rest of Chapter 2. This part gets into emotions, Black Swans, mental accounting, and some practical ideas on how to not sabotage yourself.
Behavioral Biases Part 2 - Emotions and Debiasing
This is a retelling of Chapter 2 (second half) from “Behavioral Finance for Private Banking” by Thorsten Hens, Enrico G. De Giorgi, and Kremena K. Bachmann (Wiley, 2018).