As far as we can tell, ostriches aren’t smart. And as far as we can tell, the average self-directed investor is smarter than the average person. However, there is also evidence that various psychological biases disproportionally affect smart people enough that their intelligence advantage is completely eradicated. One of these biases is the “Ostrich Effect.” […]

A very common question is, “how do you know when it stops working?” If there was a straightforward answer to this, it wouldn’t keep getting answered. It also doesn’t mean the subject is not worth pondering. A recent paper, “What Drives Anomaly Decay?” by Jonathan Brogaard, Huong Nguyen, Talis J. Putnins, and Yuchen Zhang takes […]

On Tuesday, November 5th, 2024, the US Presidential Election will happen. And that sentence is perhaps the only one that can be written before the discussion becomes partisan, irrational, or unhinged. “Unhinged” and “irrational” are not words associated with good investment decisions, so we’re going to ignore the politics and just look at the numbers. […]

There have been many proposed market indicators that seem crazy or at least simplistic “cool stories”, including: Whether an NFC team or AFC team won the Superbowl The length of cigarette butts How full parking lots have been Length of skirts   Some such indicators can be dismissed. The sample size might be too small. […]

To sell a stock short, you first need to borrow it from someone. The way that this happens is that your broker takes it from another client’s account and loans it to you. You can then sell it to someone else. This process has the fun consequence that the same stock can be shorted many […]