Behavioural Finance

What is Market Efficiency and How it Works

This discussion begins in 1906, at the Plymouth County Fair in England. Sir Francis Galton walks by a contest, where participants are asked to guess the weight of an ox. There are over 800 guesses; some from butchers and farmers, and many more from men and women with no expertise to inform their guesses.

Behavioural Finance
Man Hiking Brown Hills With Stairs by Alexander Milo in Unsplash

The Four Stages of an Index Investor

Investing in index funds is obvious once you subscribe to the idea, but getting there is not always easy. The majority of Canadians still invest their money in actively managed mutual funds. From what I have seen, the acceptance of index investing typically follows four stages.

Personal Wealth
Map on a Car Dashboard Driving Road by Tabea Dammon on Unsplash

The Map is Not the Territory

In 1931, Alfred Korzybski, an engineer, philosopher, and mathematician, presented a paper to the American Association for the Advancement of Science. In the paper, he introduced the idea that the map is not the territory. In other words, a model of a thing is not the thing itself.

Personal Wealth
Television Set Camera Filming News Interview

Newsflash: Market Gurus Are Guessing

It doesn’t take an expert to tell you the flip of a fair coin gives you 50/50 odds, heads or tails. What if I told you most market gurus fare even worse than a coin flip when it comes to making accurate financial forecasts? Would you continue to pay attention to their “expert” calls?

Behavioural Finance
Family Playing Board Games Snakes And Ladders

Snakes and Ladders

I visited my sister in the UK last summer and spent time with my young nieces and nephews. One evening, we found a compendium of board games and I introduced my five-year-old nephew to Snakes and Ladders. The rules were explained, although not completely absorbed, and off we started.

Personal Wealth
Your Investing Confuses Academics

Your Investing Confuses Academics

Academics are fascinated by the way you invest. You shouldn’t be flattered by their interest. They engage in sophisticated analysis in an effort to explain why you invest in a way that so irrational. The underlying premise of their studies is that your investing behavior makes no sense.