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Buzz & Banter


One of the subjects that most interests me is the psychological element of investing. To this end, I have referred with some frequency to the human limbic system in my posts as an important guiding factor in the investment decision-making process. There are innumerable paths down which one could go with this subject; the areas of interest are manifold.

But yesterday's New York Times Magazine has an article that, while somewhat tangential, is important nonetheless to filling out an important part of the psychological picture. Entitled, "The Futile Pursuit of Happiness" (page 44), it lays out some of the new research being done on inherent errors in psychological forecasting, decision making, and adaptation.

If you've ever wondered why you've made the same investing mistake two or more times (even though you "know better"); if you've ever found yourself after a great trade feeling less excited than you thought you might, this article might help you understand why. Particularly important to the investment world in which we toil are not the affects this research may have on individual decision making but rather institutional, or collective, thinking. And, of course, the stock market is the single most robust measure of collective thought on the planet. The old saying that none of us is as stupid as all of us may have its genesis somewhere in this important research.

Give it a well deserved read: I think you'll find plenty of investment (and life) lessons worth considering
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No positions in stocks mentioned.

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