The latest buzz — Tiger is in rehab for compulsion.
He’ll get back to golfing, no doubt, but his marital life appears to be over.
Here’s why he’s the greatest golfer:
Archives of “no doubt” tag
rssPerfectionism and Avoidance
Perfectionists are often motivated by avoidance: the need to avoid unpleasant emotional experiences. Traders who seek the perfect system are also likely to be motivated by the need to avoid unpleasant experiences.
Avoidance
Imagine taking part in a game where participants are divided into two groups, blindfolded and asked to stick out their right hand. The first group is given ten dollars each time they extend their hand. They soon learn how to play the game and, no doubt, enjoy playing at every opportunity.The second group is also given ten dollars, randomly, about 80% of the time. The remaining 20% of the time, instead of being given a dollar, their hand is jabbed with a pin. Most participants in this group are likely to quit fairly quickly — they focus on the pain and ignore the reward.With trading losses, the only pain that you will suffer is the emotional reaction to a loss — often far worse than being jabbed with a pin. If you concentrate on avoiding losses rather than on maximizing your overall gain, you are unlikely to succeed at trading.
Tharp, Trading Beyond the Matrix
Van K. Tharp came up with a terrific title for his latest book—Trading Beyond the Matrix: The Red Pill for Traders and Investors (Wiley, 2013). The reference, of course, is to the film The Matrix. “We live in a world of illusion shaped by our programming. And at some level, we seem to know that, and we seem to know that there is something better. At this point, you have a choice. You can take the blue pill and go back into a comfortable sleep where nothing changes. … Or you take the red pill and, as Morpheus says in the movie, ‘see how deep the rabbit hole goes.’” (pp. xxiv-xxv) (more…)
Greed, Fear and Irrational Behaviour
Where trading and investing in stocks, options, futures, forex, etc are concerned, there is no doubt that people have a tendency to behave strangely. Exhibiting irrational behaviour is common. People come up with all sorts of reasons and excuses for the way they are behaving, even while subconsciously admitting that they are deviating from their plan without valid reason.
The field of Behavioural Finance attempts to interpret and understand why people behave the way they do with financial activities. It is an investigation of how people’s decisions are affected by cognitive errors and emotions.
Some key points in Behavioural Finance are:
- The ‘Fear of Regret’ – where people beat themselves up about incorrect decisions or errors of judgement. They avoid this pain by holding onto positions that are moving against them, despite the intelligence that they should exit the trade while the loss is small.
- People are more upset by potential losses than pleased by wins.
- People perceive chance wins as trading success.
- The more people win, whether by method or luck, the more confident they become. This is very dangerous for those who win by luck.
- People are more exuberant and optimistic on bullish days and depressed and pessimistic on bearish days.
- People tend to make irrational decisions reflecting biased or wrong beliefs. People have a tendency to cling to beliefs, even when presented with evidence to the contrary. (more…)
Types of People and Views on Market
What are the many types of people who disseminate their views about the market? What are the major categories that I am missing or what is a better way to classify and make this useful?”
No doubt, there is a book to be done on the subject. That said…
This list is presented in order of published appearance. A caveat: “many fall into more than one category and mobile via age and wealth changes.”
The Connected Person, who makes you feel without saying it that she/he is or will be connected to the very lynch pin of policy at the Interior or some such.
Tout, who has position and wants you in for his/her favor.
Sponsor, who advertises or sponsors programs that treat him/her well.
Would-be-manager without funds impresses with his/her knowledge/ideas for you to join.
Old lion, who is not virile but still fights younger from replacing him/her in power/ romance.
Curmudgeon, who hates everything modern and wants all back to old days before tech.
Spankist, a beauty but aggrieved to give spanking unless things in order her/his way; observed to be everywhere and influence growing among spankisto and spankista’s.
Iconoclast, who is always contrary, never reads papers or travels, and feels market is wrong.
Hole-In-Shoes, who only drinks coke and eats hamburgers, never pays a fee more than 10%.
Sanctimonious, who pretends to be honest while blind to any firm dishonesty/misdoing.
Academic-Consultant, who manipulates numbers retrospectively to allure investors.
Mystic, who looks at stars and bent keys.
Old Timer, who is guided by iron castings reports and freight car loadings and newsprint figures [sample]: all as timeless methods (non retro) with healthy respect for knowledge.
Fund Manager, who is quoted as “good buy” on stock that he/she sold bulk of before recall.
Jack of All Trades, who explains every rise and decline due to (un)certainty about earnings and rates and other well chosen factors. Always welcome on TV because of his versatility. (more…)