Uncertainty, Outcomes & Our Decisions The brain has a lot of gray matter but hates gray areas. As a planning machine, the brain needs information that is certain so it can figure out the best course of action. And when we don’t get certain information, we get agitated. Perhaps you have said, “I don’t care…
The other day I was pondering what the economy and market may do in the next year. The future is always uncertain, but I think you will agree the next twelve months may be an especially interesting time. Fast forward to October 2021. If we were to then look back over the past twelve months…
The director of the CDC recently said that this fall may be the worst one we’ve ever had – as COVID and the traditional flu season come together. This is a bold prediction, and on the surface seems reasonable. But I believe this prediction, like most predictions, may be influenced by bias. In this post…
The underperformance of a diversified portfolio has been an issue for many years thanks to international underperformance, and owning lower return assets such as bonds. But even all stock portfolios are underperforming the indexes. A major help when discussing performance is to put things into proper perspective. I strongly encourage the use of the Investor…
Forecast Flaws What a wild first half of the year! Now we have many economists and market strategists providing forecasts for the second half of the year. But, before you listen to them you may want to think about how they did the first half of the year. In March, we experienced the largest market…
Preserving Your Mental Health The challenges we face today are unique and significant. The Coronavirus has unleashed uncertainty, economic pain and shelter-in-place for much of the population. Any one of those alone can impact our mental health; the combination of all three can wreak havoc on us. It is completely normal to experience feelings of…
Strategic Ignorance Practicing strategic ignorance is about selecting which information you pay attention to, and which information to ignore. It becomes an essential quality during periods of non-stop talk about Coronavirus, infection maps, shelter in place and social distancing. It is also a great characteristic to develop when markets are volatile. We recently experienced a…
Underperformance is a relative term. Compared to what? When times are good, we generally compare relative to market indexes (i.e. S&P 500). When times are bad we like to compare to an absolute return strategy. If the market is down 20% and you are down “only” 18%, I doubt you are throwing around high fives…
We often evaluate the quality of our decisions based on its outcomes. If it was a favorable outcome, then it was a good decision – and vice versa. This form of evaluation may be useful in a lab setting when variables can be controlled, but not in a situation where outcomes are influenced by randomness,…
Oftentimes we look at others’ success and see some circumstance that may have contributed to said success. While circumstances may make it easier or more difficult to achieve success, they do not create success on their own. Researchers have found that mental toughness and perseverance predicts our level of success more than any other factor.…
