Are you compensating for your biases?
If you are religious, you overestimate how many other people are religious. If you are an atheist, then
If you think that oil is going up in price, perhaps you overestimate how many other people believe
similarly. How do you subtract out the normal and usual errors of your human mind? Does charting
allow for better decisions or does one's mind merely justify what one wants to see?
Human minds are swayed by the opinions of the majority. This may be effective in allowing humans to
get along with each other by having common beliefs. When it comes to markets, however, one has to
compensate for this tendency because the majority in a market is often wrong.
Humans often selectively expose themselves to information which tends to support their beliefs. How do
you intend to compensate for this when it comes to investing? Let's say that you don't believe in wind
power to some extent because your political philosophy is opposed to it. Yet, if the current political party
is going to go forward with it, perhaps you should invest in it anyway.
The human brain often uncritically accepts the first information on a new subject as 'the truth'. What
your second-grade teacher taught you may be wrong. How do you attempt to compensate for this
tendency? Subsequent information that you receive that is consistent with the earlier information also
tends to be accepted because it "makes sense" given the already established beliefs.
A new item that is contradictory to the information present in your brain is often rejected as incorrect,
whether it is or not.
Next
Refer to:
http://carlrpacifico.com/CommonErrors.pdf
If you are religious, you overestimate how many other people are religious. If you are an atheist, then
If you think that oil is going up in price, perhaps you overestimate how many other people believe
similarly. How do you subtract out the normal and usual errors of your human mind? Does charting
allow for better decisions or does one's mind merely justify what one wants to see?
Human minds are swayed by the opinions of the majority. This may be effective in allowing humans to
get along with each other by having common beliefs. When it comes to markets, however, one has to
compensate for this tendency because the majority in a market is often wrong.
Humans often selectively expose themselves to information which tends to support their beliefs. How do
you intend to compensate for this when it comes to investing? Let's say that you don't believe in wind
power to some extent because your political philosophy is opposed to it. Yet, if the current political party
is going to go forward with it, perhaps you should invest in it anyway.
The human brain often uncritically accepts the first information on a new subject as 'the truth'. What
your second-grade teacher taught you may be wrong. How do you attempt to compensate for this
tendency? Subsequent information that you receive that is consistent with the earlier information also
tends to be accepted because it "makes sense" given the already established beliefs.
A new item that is contradictory to the information present in your brain is often rejected as incorrect,
whether it is or not.
Next
Refer to:
http://carlrpacifico.com/CommonErrors.pdf
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