Monday, May 27, 2019

Coffee Break: Avoiding Stupidity

Jim Parker, from DFA Australia Limited, shares some more useful insights and links:

Dimensional - Coffee Break with Jim Parker
Coffee Break: Avoiding Stupidity
It’s often overlooked, but the difference between having a successful investment experience and an unsuccessful one often comes down not so much to acts of brilliance but to avoiding acts of stupidity.
Coffee Break this week, drawing on the findings of behavioural finance, looks at why simple discipline and avoiding rash decisions can be so important to improving your chances of a good investment outcome.
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One of the most popular quotes from Charlie Munger, the long-term partner of legendary investor Warren Buffett, is that it is remarkable how much advantage he and Buffett have achieved by consistently trying not to be stupid instead of seeking to be smart. This article from the blog Farnam St explains the difference.
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It’s nice to be brilliant, but often the best thing you can do as an investor is just avoiding doing stupid things. http://bit.ly/2M0obiZ

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Feelings and hunches are usually not a good guide to long-term investment decisions. We tend to over-rate our own competence and give too much weight to recent events. This blog post from Psychology Today lists eight common behavioural biases behind dumb money decisions.
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Why do smart people make dumb mistakes with their money? Here are eight common behavioural biases. http://bit.ly/2WrHu9e

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Although markets are awash with randomness, there are vital and often simple cues that investors choose to ignore. A common one is overlooking signal for noise. In other words, people get distracted by headlines and miss the long-term returns available through discipline. Here are eight reasons stupidity is so common.
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What are the major factors driving stupid investment decisions? Here are eight common reasons people go astray. http://bit.ly/2HTcatN
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