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.