Investment Mistakes and Good or Bad Investment Strategies
As markets are in a holding pattern, persistently in a high valuation level for stocks and extremely low interest rates for bonds, it’s a good time to ponder more on investment methodology or philosophy.
Often, when investors (fund managers, for example) had a loss, it’s very quick for them to do a soul searching, offering some sort of mea culpa on what went ‘wrong’. Human brains are mostly wired to adopt a binary right or wrong binary logic: if you invest in something that loses money or lags behind others in a period of time, you must have done something wrong.
However, in investing, it’s far more complicated than this. Understanding the non-binary (statistical) logic in this process is important.
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