I haven’t written much lately about behavioural finance - the way in which human psychology makes successful investing more difficult - but asumming up the importance of the topic in a blog post by U.K.-based fund manager and author Joe Wiggins provided a good excuse to revisit the theme. Mr. Wiggins wrote: “The central issue that behavioural finance faces is that – at its core – it is asking investors to stop doing things they inherently and instinctively want to do.
The human tendency to feed our egos can also get in the way of portfolio returns. The belief that we are smarter than others leads to strategies with proven low probabilities of success, like market timing. Ego can also lead to getting emotionally attached to an investment idea and refusing to admit it hasn’t worked.
The third tip is to avoid looking at what other investors are doing; the fourth is to accept that markets are extraordinarily complex and, in the end, unpredictable over shorter time frames. The fifth and final rule is to ignore most of what has grabbed your attention in any given day when making investment decisions. This is similar to venture capitalist Morgan Housel’s advice to avoid all news that is unlikely to be relevant three months in the future.
A new consensus is quietly forming around Canada’s telecommunications industry – a painful narrative that is putting more pressure on the sector’s sinking share prices. After years of easy wins, cable and wireless companies are trapped in a new era of tepid growth, and there are no easy fixes in sight,Most of a relationship with a financial adviser will rightly focus on your retirement. But your adviser’s retirement plans matter, too.
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