The Insightful Investor                        Using cutting-edge psychology to invest smarterTuesday, December 13, 2011
The Problem: Human FallibilityTuesday, December 13, 2011
Investing mistakes                   • underperformance                   • rack up excessive fees                   • fai...
The facts                              $100k invested              Average                                               S...
Modern day behavioral                    finance provides an                   understanding of the                        ...
If we know problems, we can create                   solutionsTuesday, December 13, 2011
How we make investment decisions                                rules of thumb that                             we turn to...
Neuroeconomics               our brains are actually                hardwired to making                 irrational choices...
Mental models                   •         simply a                             representation of                          ...
As investors, where do we go                              wrong?Tuesday, December 13, 2011
Availability Bias                                        [perspective matters]                 Investors                  ...
Availability Bias         [learn more]         • Mental Model: Availability Bias (Farnam Street)         • Judgment under ...
Confirmation Bias            Tendency for          [looking for ways to be right]             investors to                 ...
Confirmation Bias         [learn more]           • How to Ignore the Yes-Man in your Head (WSJ)           • Overview of Con...
Anchoring Bias                                   [basing decisions on irrelevant                                        fig...
Anchoring Bias         [learn more]         • The Psychology Behind Common Investor Mistakes (The         Big Picture)    ...
Overconfidence              We tend to             think we are           better investors            than we really       ...
Overconfidence         [learn will be Boys: Gender, Overconfidence, and Common                more]         • Boys         S...
Hindsight Bias            Tendency for   [dang, my judgment is good!]            investors to          look at the past   ...
Hindsight Bias         [learn more]         • Hindsight’s not so wonderful (Psy-Fi Blog)         • Cognitive Biases: A Vis...
Loss Aversion            Investors feel         [I’ll take door #3, Chuck]            pain of loss 2x           as much as...
Loss Aversion         [learn more]         • Loss Aversion (Jonah Lehrer)         • Loss Aversion (The Economist)         ...
Paralysis by Analysis                                      [Eesh, information overload!]           Investors facing       ...
Paralysis by Analysis         [learn more]         • Choice Proliferation, Simplicity Seeking and Asset         Allocation...
Mental Accounting          Dividing current         [well, I bought the ticket anyway...]             and future          ...
Mental Accounting         [learn more]         • The Curse of Mental Accounting (Wired)         • The Psychology of Money:...
Social Proof Bias                                     [gee, if Bob invested in it...]                Investors            ...
Social Proof Bias         [learn more]         • Avoid Losses: 5 Ways Investment Researchers Lie to You         (Financial...
Regret Aversion Bias             We regret and             remorse more             for actions we              did take t...
Regret Aversion Bias         [learn more]         • Regrettable Choices (Cabot)         • Regret, Portfolio Choice, and Gu...
Status Quo Bias            Investors tend       [you know, change is just so scary]             not to make            cha...
Status Quo Bias         [learn more]         • Status Quo Bias in Decision Making (Samuelson and         Zeckhauser)      ...
Vividness Bias           Underestimate           low probability        [that couldn’t happen to me]              events t...
Vividness Bias         [learn more]         • Making the future easier to imagine can improve         retirement outcomes ...
The Effects of our BiasesTuesday, December 13, 2011
Endowment Effect                                 [investors have a hard time selling]            Investors place          ...
Endowment Effect         [learn more]         •    It’s mine, I tell you (The Economist)         •    The Endowment Effect...
Mean Reversion Effect                                      [aw, it’s gotta come back!]              Belief that           ...
Mean Reversion Effect         [learn more]         • Mean Reversion in Stock Prices: Evidence and Theory         (Summers ...
Overtrading                                [but, I’ve got the magic touch]            Trying to profit             by exces...
Overtrading         [learn more]         • Just How Much Do Investors Lose From Trading (Barber,         Lee, Liu)        ...
Do nothing                              [thanks for the advice, but I’ll just                                      keep th...
Do nothing         [learn more]         • Asset Allocation and Information Overload: The Influence         of Information D...
So much boils                 down to                  framingTuesday, December 13, 2011
Framing: It’s all relative          Framing is part of our outlook, how we compare things to          other things, how we...
Reframing our thinking about investing • Overcome the need to break even • If investing in individual stocks, set clear ex...
[impossible!]                        Batting 1.000: winning without losing         The investment game is no longer a buy-...
Wow, investors have a                                lot of biasesTuesday, December 13, 2011
So, how do we *win*                                at the investing                                     game?Tuesday, Dece...
The GoalTuesday, December 13, 2011
The first step                     is admitting                      you have a                       problemTuesday, Decem...
But, it’s not just enough to recognize the                              problem                   Need self               ...
The ability to consistently (always) make              money based on an approach or a system             that can be exec...
Many different systems work                                      BUT         We don’t stick to the systemsTuesday, Decembe...
“The real secret to investing is that there is no secret                                         to investing.            ...
Make the shift                   Emotional    Cognitive                    Investing   InvestingTuesday, December 13, 2011
Overcoming the animal spirits                                              In an experiment at                            ...
investors must learn how to                 •    determine what kind of investor you are                 •    set realisti...
[big idea]                                 Your optimal investing                             strategy depends on who you ...
if ne                                                        cessa                                                        ...
• Are you money-focused or life-focused?               • Market orientation vs. self-orientation?               • Sporadic...
Emotional needs        Financial needs                               ?                                   MarketPsychTuesda...
Investments offer 3 types               of benefits                                              tradeoffs                 ...
To reframe                        Dr Peterson of MarketPsych recommends                            creating a slide show i...
Learning                             from the                              greatest                             investorsT...
[new evidence]    Emotional Intelligence (EI)                             Superior Investment Performance    Sources:    E...
Measure your own personality    The Big 5                       1.    Emotional sensitivity                       2.    Ex...
Test your own investor personality      Go to:      http://www.marketpsych.com/personality_test.phpTuesday, December 13, 2...
Sample Personality Test from MarketPsych                                                How it affects   My plans to      ...
Traits of the great investors   They remained upbeat after     a series of losses, staying       calm, focused, and    ana...
Good investors are                         Not emotionless, but utilize “good”                              emotions and a...
Bernard Baruch’s 10 Rules for Investing Success           1. don’t speculate unless you do it full time           2. resis...
The Game: Redefining what investing is all aboutTuesday, December 13, 2011
The game is composed of two parts: the outer game and                                         the inner game.             ...
Tennis vs. Investing                             “The former is played against                             opponents, and ...
Putting theory to practiceTuesday, December 13, 2011
How investors lose to psychology                             •   not defining a loss                             •   not ta...
Becoming a        better investorTuesday, December 13, 2011
[define a loss]      Rational investors follow the maxim “Cut your             losses and let your profits run”             ...
[define a loss]       For portfolio            buy individual, fixed maturity bonds        including zero-coupons: bought at...
[avoid traps in status displays]             conquer the usual suspects                             • envy                ...
[know when to hold ‘em]                         Average millionaire spends $31k on a car                                  ...
[be wary of crowded trades]    “I will tell you how to become  rich. Close the doors. Be fearful     when others are greed...
[be wary of crowded trades]                                     • use good                                         judgmen...
[have a money management plan]           • Truly understand tradeoffs of actively managed funds vs.                  passi...
[resources]                             Web                     Books       •      Tradestreaming.com     •   What Investo...
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Insightful investor

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Do you want to become a better investor?

Advances in behavioral finance are uncovering all the ways we make mistakes as investors.

My free ebook, The Insightful Investor, looks at all the advances in finance, one by one with links to more resources.

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Lastly, the book provides a framework to better

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Insightful investor

  1. 1. The Insightful Investor Using cutting-edge psychology to invest smarterTuesday, December 13, 2011
  2. 2. The Problem: Human FallibilityTuesday, December 13, 2011
  3. 3. Investing mistakes • underperformance • rack up excessive fees • failure to reach financial goals • susceptibility to fraudTuesday, December 13, 2011
  4. 4. The facts $100k invested Average S&P 500 from 1989-2009 investor Returns (after $292,329 $82,288 inflation) Dalbar Inc. StudyTuesday, December 13, 2011
  5. 5. Modern day behavioral finance provides an understanding of the problemsTuesday, December 13, 2011
  6. 6. If we know problems, we can create solutionsTuesday, December 13, 2011
  7. 7. How we make investment decisions rules of thumb that we turn to quickly to size up our surroundings HeuristicsTuesday, December 13, 2011
  8. 8. Neuroeconomics our brains are actually hardwired to making irrational choices -- Richard Thaler, Author of NudgeTuesday, December 13, 2011
  9. 9. Mental models • simply a representation of an external reality inside your head • concerned with understanding knowledge about the world Source: http://www.farnamstreetblog.com/mental-models/Tuesday, December 13, 2011
  10. 10. As investors, where do we go wrong?Tuesday, December 13, 2011
  11. 11. Availability Bias [perspective matters] Investors predict likelihood of future events based on what is personally relevantTuesday, December 13, 2011
  12. 12. Availability Bias [learn more] • Mental Model: Availability Bias (Farnam Street) • Judgment under Uncertainty: Heuristics and Biases (Kahneman, Tversky) • Investment Decisions: How to Avoid Availability Bias (Wise Investing) • How professional biases can cloud judgment (Applied Behavioral Finance) • Cognitive Biases Series -- PBS (Meir Statman) [.pdf]Tuesday, December 13, 2011
  13. 13. Confirmation Bias Tendency for [looking for ways to be right] investors to favor information that supports their preconceptions, regardless of whether it’s trueTuesday, December 13, 2011
  14. 14. Confirmation Bias [learn more] • How to Ignore the Yes-Man in your Head (WSJ) • Overview of Confirmation Bias (CXO Advisory) • Confirmation Bias, Overconfidence, and Investment Performance: Evidence from Stock Message Boards (Park, et al) • Confirmation Bias (Distressed Debt Investing)Tuesday, December 13, 2011
  15. 15. Anchoring Bias [basing decisions on irrelevant figures and statistics] Investor tendency to attach or anchor our thoughts to a reference pointTuesday, December 13, 2011
  16. 16. Anchoring Bias [learn more] • The Psychology Behind Common Investor Mistakes (The Big Picture) • Anchoring (Jonah Lehrer) • The Cognitive Bias Song (Freakonomics) • Surprised Again? The Anchoring Bias of Investors (Psychology Today)Tuesday, December 13, 2011
  17. 17. Overconfidence We tend to think we are better investors than we really are [overconfidence leads to over trading, lower returns]Tuesday, December 13, 2011
  18. 18. Overconfidence [learn will be Boys: Gender, Overconfidence, and Common more] • Boys Stock Investment (Barber, Odean) [.pdf] • Overconfidence and Over Optimism (Psy-Fi Blog) • Evolution of Overconfidence (Farnam Street) • U.S. Investor Behavior: The Government Report (Portfolioist) • T2 Partners’s Netflix Mea Culpa: A Study in Behavioral Finance (Stone Street Advisors)Tuesday, December 13, 2011
  19. 19. Hindsight Bias Tendency for [dang, my judgment is good!] investors to look at the past and see events more predictable than they actually wereTuesday, December 13, 2011
  20. 20. Hindsight Bias [learn more] • Hindsight’s not so wonderful (Psy-Fi Blog) • Cognitive Biases: A Visual Study Guide (Scribd) • Heuristics: The Foundation of Adaptive Behavior (Decision Science News) • Blink and statistics: a close reading (Numbers Rule Your World) • Confirmation Bias, Again (Random Roger)Tuesday, December 13, 2011
  21. 21. Loss Aversion Investors feel [I’ll take door #3, Chuck] pain of loss 2x as much as they derive pleasure from an equal gainTuesday, December 13, 2011
  22. 22. Loss Aversion [learn more] • Loss Aversion (Jonah Lehrer) • Loss Aversion (The Economist) • Can Losing Lead to Winning (Farnam Street) • The behavioral economics of Pay-as-you-Drive (PAYD) auto insurance (Nudge) • Regrets? I’ve had a few (Tim Harford)Tuesday, December 13, 2011
  23. 23. Paralysis by Analysis [Eesh, information overload!] Investors facing too many decisions freeze up and make bad decisionsTuesday, December 13, 2011
  24. 24. Paralysis by Analysis [learn more] • Choice Proliferation, Simplicity Seeking and Asset Allocation (Iyengar, Kamenica) • Decisions, Decisions: Too Much Choice Hard for Investors (AdvisorOne) • When Choice is Demotivating: Can One Desire Too Much of a Good Thing (Iyengar, Lepper) • So many funds, so little time: The case for simplicity (Reuters Money)Tuesday, December 13, 2011
  25. 25. Mental Accounting Dividing current [well, I bought the ticket anyway...] and future assets into separate mental accounts, investors assign different values to eachTuesday, December 13, 2011
  26. 26. Mental Accounting [learn more] • The Curse of Mental Accounting (Wired) • The Psychology of Money: The Last Mile of Saving (I Will Teach You to Be Rich) • Mental Accounting Explains Why You Buy Things You Don’t Need (Forbes) • Mental Accounting (Washington Post) • The benefits of mental accounting (Marketplace)Tuesday, December 13, 2011
  27. 27. Social Proof Bias [gee, if Bob invested in it...] Investors ascribe a high value to investments other investors are interested inTuesday, December 13, 2011
  28. 28. Social Proof Bias [learn more] • Avoid Losses: 5 Ways Investment Researchers Lie to You (FinancialMentor) • How Social Proof Helps Smart Investors (Zero Hedge) • Is social proof a rational approach to investment selection (Quora) • Asch Conformity Experiment (Simply Psychology) • How I lost 89% on 1 stock (Fool)Tuesday, December 13, 2011
  29. 29. Regret Aversion Bias We regret and remorse more for actions we did take than ones we didn’t [crud, I knew I shouldn’t have bought that stock!]Tuesday, December 13, 2011
  30. 30. Regret Aversion Bias [learn more] • Regrettable Choices (Cabot) • Regret, Portfolio Choice, and Guarantees in Defined Contribution Schemes (Muermann, et al) • 2010 Behavior Study: Conservative Biases (Morningstar Advisor) • Is it OK to overpay (Nudge)Tuesday, December 13, 2011
  31. 31. Status Quo Bias Investors tend [you know, change is just so scary] not to make changes unless offered a really compelling incentiveTuesday, December 13, 2011
  32. 32. Status Quo Bias [learn more] • Status Quo Bias in Decision Making (Samuelson and Zeckhauser) • Status Quo Bias (Slideshare) • Barry Schwartz on the paradox of choice (TED Talks) • Our Own Worst Investing Enemies: How We Make Retirement More Difficult (Wise Investing)Tuesday, December 13, 2011
  33. 33. Vividness Bias Underestimate low probability [that couldn’t happen to me] events that haven’t happened recently and overestimate them when they have --BuffettTuesday, December 13, 2011
  34. 34. Vividness Bias [learn more] • Making the future easier to imagine can improve retirement outcomes (Allianz) • The Vividness of your Future Self: Using Immersive Virtual Reality to Increase Retirement Saving (Stanford Graduate School of Business)Tuesday, December 13, 2011
  35. 35. The Effects of our BiasesTuesday, December 13, 2011
  36. 36. Endowment Effect [investors have a hard time selling] Investors place a higher value on investments they already ownTuesday, December 13, 2011
  37. 37. Endowment Effect [learn more] • It’s mine, I tell you (The Economist) • The Endowment Effect (Jonah Lehrer) • Why it’s so hard to let go (MarketPsych) • Why do people hold on to losing stocks (Nudge)Tuesday, December 13, 2011
  38. 38. Mean Reversion Effect [aw, it’s gotta come back!] Belief that investments will return to their meanTuesday, December 13, 2011
  39. 39. Mean Reversion Effect [learn more] • Mean Reversion in Stock Prices: Evidence and Theory (Summers and Poterba) • Shrinking margins make stocks’ cheapness just a mirage (Forbes) • 4 Mean Mean Reversions (Pragmatic Capitalism) • Mean Reversion Redux (Quantivity)Tuesday, December 13, 2011
  40. 40. Overtrading [but, I’ve got the magic touch] Trying to profit by excessive buying and sellingTuesday, December 13, 2011
  41. 41. Overtrading [learn more] • Just How Much Do Investors Lose From Trading (Barber, Lee, Liu) • Annual Dalbar Individual Investor Study (Dalbar) • When to Buy or Sell? Don’t Trust Your Instincts (New York Times)Tuesday, December 13, 2011
  42. 42. Do nothing [thanks for the advice, but I’ll just keep things as is] When overwhelmed, some investors just shut downTuesday, December 13, 2011
  43. 43. Do nothing [learn more] • Asset Allocation and Information Overload: The Influence of Information Display, Asset Choice and Investor Experience (Agnew and Szykman) • Situational overload and ambient overload (Rough Type) • Data Overload for Retail Investors (onwallstreet)Tuesday, December 13, 2011
  44. 44. So much boils down to framingTuesday, December 13, 2011
  45. 45. Framing: It’s all relative Framing is part of our outlook, how we compare things to other things, how we judge our performance. The way we naturally frame investing hurts us. It causes us to: • take on more risk than we really should as we reach too far for gains • equate study and hard work with beating the market when it’s not that simple • put too much faith in experts or in stock picks • look at things as all or nothing when in reality, there is an infinite spectrum • take a very short term focusTuesday, December 13, 2011
  46. 46. Reframing our thinking about investing • Overcome the need to break even • If investing in individual stocks, set clear exit points and plan for different scenarios (put this in writing) • There are always two sides of a trade: focus on the person selling (or buying) you stock and ask yourself whyTuesday, December 13, 2011
  47. 47. [impossible!] Batting 1.000: winning without losing The investment game is no longer a buy-and-hold game. It’s a buy and sell game -- it’s called Day Trading. (Meir Statman, What Investors Really Want, 57) Investors have shown a reluctance to sell losers -- to their detriment. Dr Richard Peterson of MarketPsych calls this “hitting the investment snooze button”.Tuesday, December 13, 2011
  48. 48. Wow, investors have a lot of biasesTuesday, December 13, 2011
  49. 49. So, how do we *win* at the investing game?Tuesday, December 13, 2011
  50. 50. The GoalTuesday, December 13, 2011
  51. 51. The first step is admitting you have a problemTuesday, December 13, 2011
  52. 52. But, it’s not just enough to recognize the problem Need self awareness/ behavioral changesTuesday, December 13, 2011
  53. 53. The ability to consistently (always) make money based on an approach or a system that can be executed with total confidence. -- Robert Koppel (Investing and the Irrational Mind, 26)Tuesday, December 13, 2011
  54. 54. Many different systems work BUT We don’t stick to the systemsTuesday, December 13, 2011
  55. 55. “The real secret to investing is that there is no secret to investing. Every important aspect of value investing has been made available to the public many times over, beginning in 1934 with the first edition of Security Analysis. That so many people fail to follow this timeless and almost foolproof approach enables those who adopt it to remain successful.” -- Baupost’s Seth Klarman, 6th edition of Security Analysis (2008)Tuesday, December 13, 2011
  56. 56. Make the shift Emotional Cognitive Investing InvestingTuesday, December 13, 2011
  57. 57. Overcoming the animal spirits In an experiment at CalTech, participants ranked the most expensive wine the tastiest (only when they were told of the real price)Tuesday, December 13, 2011
  58. 58. investors must learn how to • determine what kind of investor you are • set realistic and achievable investment goals • learn how to be disciplined and patient • manage risk effectively • learn from mistakes • preserve investment and emotional capital (Investing and the Irrational Mind, 50)Tuesday, December 13, 2011
  59. 59. [big idea] Your optimal investing strategy depends on who you are. -- Dr Richard Peterson, MarketPsych: How to Manage Fear and Build your Investor Identity, 27Tuesday, December 13, 2011
  60. 60. if ne cessa ry Change/ Reframe Figure out who you are as an investorTuesday, December 13, 2011
  61. 61. • Are you money-focused or life-focused? • Market orientation vs. self-orientation? • Sporadic vs. Consistent Investing Frames MarketPsychTuesday, December 13, 2011
  62. 62. Emotional needs Financial needs ? MarketPsychTuesday, December 13, 2011
  63. 63. Investments offer 3 types of benefits tradeoffs 1. utilitarian 2. expressive 3. emotionalTuesday, December 13, 2011
  64. 64. To reframe Dr Peterson of MarketPsych recommends creating a slide show in 5 steps 1. identify topics about future financial life 2. make it vivid 3. capture the feeling 4. record it 5. match financial planTuesday, December 13, 2011
  65. 65. Learning from the greatest investorsTuesday, December 13, 2011
  66. 66. [new evidence] Emotional Intelligence (EI) Superior Investment Performance Sources: Emotional intelligence and investor behavior (Ameriks, et al, 2007) [.pdf] Exploring the Nature of “Trader Intuition” (Bruguier, et al, 2010) [.pdf]Tuesday, December 13, 2011
  67. 67. Measure your own personality The Big 5 1. Emotional sensitivity 2. Extraversion 3. Openness 4. Agreeableness 5. ConscientiousnessTuesday, December 13, 2011
  68. 68. Test your own investor personality Go to: http://www.marketpsych.com/personality_test.phpTuesday, December 13, 2011
  69. 69. Sample Personality Test from MarketPsych How it affects My plans to Personality test My score my investing accomodate Conscientiousness vs impulsiveness Emotional stability vs. sensitivity Extraversion vs. introversion Agreeableness vs. self- interest Openness vs traditionalismTuesday, December 13, 2011
  70. 70. Traits of the great investors They remained upbeat after a series of losses, staying calm, focused, and analytical throughout the ups and downs of the market (Investing and the Irrational Mind, 26)Tuesday, December 13, 2011
  71. 71. Good investors are Not emotionless, but utilize “good” emotions and avoid “bad” confident, self-aware, goal oriented, organizedTuesday, December 13, 2011
  72. 72. Bernard Baruch’s 10 Rules for Investing Success 1. don’t speculate unless you do it full time 2. resist so-called information or tips 3. before purchasing a security, know everything you can about the company: its earnings and its capacity for growth 4. never attempt to buy at a bottom or sell at a top of a market: this is a feat achieved only by liars 5. take your losses swiftly and clearly -- the first loss is your easiest 6. don’t buy too many securities. focus on a few investments that can be monitored carefully. 7. periodically reappraise all your investments to make sure that they are appropriate for your particular strategy 8. know when you can sell to your greatest advantage (of course, this also applies to buying) 9. never invest all your funds. keep some liquid. 10. Don’t try to be a jack of all investments. stick to the field you know best. Investing and the Irrational Mind, 17Tuesday, December 13, 2011
  73. 73. The Game: Redefining what investing is all aboutTuesday, December 13, 2011
  74. 74. The game is composed of two parts: the outer game and the inner game. The Inner Game of Tennis by Timothy Gallwey, captain of the Harvard University Tennis TeamTuesday, December 13, 2011
  75. 75. Tennis vs. Investing “The former is played against opponents, and is filled with contradictory advice. The latter is played not against, but within the mind of the player, and its principal obstacles are self-doubt and anxiety.” (Investing and the Irrational Mind, 25)Tuesday, December 13, 2011
  76. 76. Putting theory to practiceTuesday, December 13, 2011
  77. 77. How investors lose to psychology • not defining a loss • not taking a loss/profit • getting locked into a belief • getting lured into status investments • revenge investing • wishful thinking • getting swept up in bubbles • not seizing an opportunity • being more invested in being right than making money • confusing the noise with the signal • not applying investment method consistently • not having a money management plan • not investing in the right state of mindTuesday, December 13, 2011
  78. 78. Becoming a better investorTuesday, December 13, 2011
  79. 79. [define a loss] Rational investors follow the maxim “Cut your losses and let your profits run” (What Investors Really Want, 134) [homework] understand mental accounting clear hindsight bias vanquish pride avoid regret don’t try to get-even/revenge realize lossesTuesday, December 13, 2011
  80. 80. [define a loss] For portfolio buy individual, fixed maturity bonds including zero-coupons: bought at a discount, avoid mental accounting errors because investors should get back all invested capital at maturity date vs. holders of bond mutual funds never assured that they will not incur a loss when the sell (What Investors Really Want, 145)Tuesday, December 13, 2011
  81. 81. [avoid traps in status displays] conquer the usual suspects • envy • schadenfreude (happiness at the misfortune of others) • stay clear of status competitions • be skeptical investments sold on exclusivity/accessTuesday, December 13, 2011
  82. 82. [know when to hold ‘em] Average millionaire spends $31k on a car Thomas Stanley, Stop Acting RichTuesday, December 13, 2011
  83. 83. [be wary of crowded trades] “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” -- Warren BuffettTuesday, December 13, 2011
  84. 84. [be wary of crowded trades] • use good judgment of information • assess consequences of being wrong about the herdTuesday, December 13, 2011
  85. 85. [have a money management plan] • Truly understand tradeoffs of actively managed funds vs. passive index funds • scrutinize and pay fair fees for advice (regardless of active/passive) • sometimes advice pays because it helps avoid bigger problems • piggyback others’ ideas, stock picks carefully (great investors make mistakes) • social investing injects more voices into the discussionTuesday, December 13, 2011
  86. 86. [resources] Web Books • Tradestreaming.com • What Investors Really Want (Statman) • FarnamStreetBlog.com • Investing and the Irrational Mind • Psy-Fi Blog • (Koppel) MarketPsych: How to Manage Fear and Build your Investor Identity (Peterson) • Tradestream your Way to Profits: Building a Killer Portfolio in the Age of Social Media (Miller)Tuesday, December 13, 2011
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