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. […]
CONTINUE READING >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 […]
CONTINUE READING >I’ve been thinking about technical analysis (TA). Not so much how to do it, but more about what it actually is. Some of it can be tested scientifically, but a lot can’t (for more on this distinction refer to the excellent book by David Aronson, “Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference […]
CONTINUE READING >Peter Lynch was an exceptional investor. He took over the Fidelity Magellan fund in 1977 and over the next 13 years he increased the assets under management from $18 million to $14 billion. This was not just a triumph of marketing because over this period, he averaged a return of over 29% a year, doubling […]
CONTINUE READING >Overconfidence is one of the most damaging psychological biases an investor can have. It leads us to trade too often (racking up unnecessary costs) and too heavily weigh our own analysis (leading to positions that are too large). It is also extraordinarily hard to avoid, and in some ways seems to be humans’ natural state, […]
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