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Category: Investing Emotions

All or Nothing

All or Nothing

Imitation is the sincerest form of flattery. – Charles Caleb Colton All or Nothing is a presentation of Amazon and NFL Films that follows the lives of players, coaches, and owners of a sports franchise over an entire season. Season one debuted in 2016 and showcased the Arizona Cardinals. Long-time football fans will recognize the attempt to copy the success of HBO’s popular series Hard Knocks. Investors often engage in another form of imitation—attempting to mimic the past successes of…

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You’ve Been Framed

You’ve Been Framed

The study of behavioral finance defines framing as the tendency of decision-makers to respond to various situations differently based on the context in which a choice is presented. In many contexts, the decision maker is influenced by the manner in which the data is presented. As an example, consider this headline from last week: “Dow Jones drops 832 points in third worst drop in history.” If you think this was an isolated news story, Google “third worst point decline in…

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Second-Level Thinking

Second-Level Thinking

For the past couple of years, I have been a rotating contributor to the Money Matters department of Live it! magazine. Live It! is a free publication from the West Central Tribune. My article in the June/July issue is titled Second-level thinking in finances. Each issue of Live it! is built around a theme. This issue features a family farm that has ventured beyond traditional crop farming to produce strawberries. If you’ve ever seen a strawberry farm, you know that…

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Your Money and Your Brain

Your Money and Your Brain

Scientists often claim your brain is more advanced than the most powerful supercomputers. As an investor, this is a power tool you have at your disposal. Yet all too often, our brain gets in the way of making rational investment decisions. Actual decisions made by investors versus what academia says they should do is explained by the study of behavioral finance.