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Category: Behavioral Biases

When Home Bias Helps

Home bias (favoring your home country in making asset allocation decisions) is pervasive. This is true in spite of the mountain of evidence that suggests it’s sub-optimal: international diversification has been shown to reduce risk in a portfolio over the long run without hurting return. Why do investors make “sub-optimal” decisions? Because they are human […]

“All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” – Arthur Schopenhauer The degree to which misinformation is spread and believed is remarkable, a theme I expressed in last week’s writing.  But what is even more incredible is the extent to which […]

“We have met the enemy and he is us.” – Walt Kelly We have entered a dangerous time in history.  A time when the truth changes every day. The amount of misinformation being spread daily is nothing short of remarkable.  It seems like everything is “fake news” now independent of who is reporting it.  Rather […]

“The world is wrong side up. It needs to be turned upside down in order to be right side up.” – Billy Sunday A lot has clearly happened post-election to investment markets, as significant rotations have pushed money into new themes. There has been a historic streak of positive returns in small-cap stocks, bonds have sold […]

We’ve seen a lot in the last two weeks: Manias, Panics, and All-Time Highs. Manias Dry Ships Inc. (a shipping company) went from $4 to $102 in 4 trading day following the election, an astounding gain of over 2,000%. There were a wide variety of reasons attributed to the advance (Trump is bullish for growth/shipping, […]