The book itself I would not recognize as genious, but I did like following ideas:
Investors hate losses about 2,5 times as much as they
like gains. A 25% gain feels as good a 10% loss. Said otherwise, if you gain
10% over here and lose 10% over there, you feel like you are behind. This is
commonly known as loss aversion, intimating shortsightedness and overactive
reaction to short-term movements. At root, myopic loss loss aversion and the
mistakes it leads to are about two things – pride and regret.
Traditional
finance notions derive from traditional notions of economics – that humans in
aggregate act rationally, markets are efficient or at least semi-efficient, and
individuals acting irrationally may be ignored. By contrast, behavioral finance
assumes quirky behavior . Irrationality is assumed to be potential behavior.
It’s true – our modernized skulls contain Stone age brains. Investors aren’t
rational automatons; they are humans and regularly behave in crazy ways when
making financial decisions.
You are a unique, wonderful person. I have no doubt; however you’re probably unique just about like everyone else. You’re not statistically unique. In a statistical sense being unique is to be way, way out the end of the bell curve on some set of attributes. If you’re really unique , you’re technically quite weird. Unique means weird. Most folks like to think of themselves as unique. They don’t like to see themselves as weirdos. You probably
Great quotes from the book. I'm with Fisher Investments, and you can learn more about Ken and his bestseller The Only Three Questions That Count at the book's official website.
Posted by: Fisher Outreach | July 23, 2009 at 10:08 AM