Top 10 Rules for Forecasting
h.t. M Kline
Think You’re Smarter than a Monkey?
BBC has an article discussing the same research we highlighted almost a year ago: Her conclusion is that these biases are so deep rooted in [...]
You shouldn’t buy this stock at any price.
Music to a value investor's ears: You shouldn't buy this stock at any price. Ben Graham advocated that we should always follow a cardinal rule [...]
Natural Gas Trading and Mental Accounting
It has been a long, cold winter on the East Coast. This has been very good for anyone long natural gas. Below is a chart, [...]
The Pursuit of Useless Information: Does this apply to Stock Picking?
Many in the investing world feel that, when assessing securities for purchase, the more information that can be assembled, the better off the investor. In [...]
CFA Institute Magazine Quote: Algos Dreaming
The latest edition of the CFA Institute Magazine has an interesting article on "Do Algorithms Dream of Electronic Clients?" They even managed to quote me as [...]
Woefully Neglected Evidence on Systematic Decision Making
50 Years of Successful Predictive Modeling Should Be Enough: Lessons for Philosophy of Science Our aim in this paper is to bring the woefully neglected literature on [...]
Imagine the World in 2035: No “poor” countries
Bill and Melinda Gates think it is possible: By 2035, there will be almost no poor countries left in the world. Check out the Gates [...]
Models vs. Experts: #15: Do Behavioral cues matter?
Psychiatric diagnoses: A study of how they are made Kendell, R. E. British Journal of Psychiatry, 122, 437-445 An online version of the paper can [...]
The Psychology of Scarcity: Part 2 of 2 (Bonus! Scarcity in Asset Allocation)
How can one optimize performance and decision-making when one is affected by scarcity? This is the subject of Part 2 of our 2-part scarcity series. [...]
Confirmation Bias Strikes Again…
http://www.cnn.com/2014/01/17/travel/southwest-wrong-airport The pilots of Southwest flight 4013 say that Branson Airport was correctly programmed into their on-board computer Sunday, but that they "mistakenly identified" another [...]
Fama Doesn’t Deserve a Nobel Prize?
Marty Whitman makes a bold statement in his recent letter: “I am disappointed that a Nobel Prize was awarded to Eugene Fama, who studies only markets and [...]
How many times has the S&P 500 been over 32%?
What's your guess? Seriously, before looking at the answer below... And the answer is... scroll. scroll. scroll. scroll. scroll. scroll. scroll. scroll. scroll. scroll. scroll. [...]
The Psychology of Scarcity: Part 1 of 2
"…The inconveniences of a real scarcity cannot be remedied; they can only be palliated.” - Adam Smith, Chapter V, The Wealth of Nations As Adam [...]
Is Volatility for Misguided Geeks?
Warren Buffett doesn’t like it when people use volatility to measure risk. He succinctly describes his criticism: We bought The Washington Post Company at a [...]
What is Behavioral Finance?
Behavioral finance means a lot of things to a lot of people. In this short piece I'll outline what "behavioral finance" means to academic researchers. [...]
Quant Jocks and Tire Kickers
I just love the title of this paper... A job market paper for a PhD student (Jane Zhao) who was on the market a few [...]
Pensions and the Tragedy of the Flypaper Effect
Arthur Okun showed that "money sticks where it hits," just a flies do to flypaper. Almost everyone has used flypaper from time to time. If [...]
Happy Thanksgivukkah!
Thanksgiving. Hanukkah. Why not Thanksgivukkah? Below, one of my partners hopped on his Bloomberg and plotted out some interesting time series: Turkey spot prices. Hanukkah [...]
Predicting Stock Returns with Investor Sentiment
Market participants often claim that investor sentiment matters for stock returns. This premise was formally studied by Malcolm Baker and Jeffrey Wurgler in their landmark [...]