Seeing Hidden Depths… Into The Forecaster, Not The Future

Top 5 of the Week of February 18th

Market Fox Daniel Grioli investigates the link between being contrarian and being successful. Behavioural Investment author Joe Wiggins asks if having more info can lead to worse investment decisions. And writing for Real Investment Advice, Michael Lebowitz discusses the stress between rising wealth and income inequality gaps.

From Of Dollars and Data, Nick Maggiulli considers the power of heuristics. And Bob Seawright, writer of Above the Market blog, looks at last year’s forecasting follies…

A Contrary State of Mind

  • Being contrarian is an often misunderstood quality, with some investors merely believing that it is being a value investor or just not following the crowd
  • Contrarianism isn’t a characteristic, instead it is more about being available to more options and perspectives, but it is also a fundamental part of being successful
  • Employ a state of mind which encourages you to think of alternate points of view—though these should be backed up by risk management and common sense too

Don’t Justify

  • In today’s modern age, investors are subject to a superabundance of information to make informed decisions with
  • Yet, with this surfeit of data comes a number of possible snags, the largest of which involve the ability to be able to unravel the crucial signals from the surrounding white noise
  • More information can tend to lead us towards overconfidence in our decisions, be careful that you don’t use data to just justify a premeditated resolution

A Rising Imbalance

  • The emphatic difference between rising wealth and income inequality gaps has been much discussed recently in politics
  • The Federal Reserve’s inflationary policy to reduce debt is at the same time increasing the depth of burdens and having an impact on global economies
  • Until the Fed’s measures are reviewed, assessed, and changed, these problems will not be going anywhere anytime soon

Mighty, Mighty Heuristics

  • A single measure of information can give us a lot of insight into a subject area; such heuristics can help understand systems in a way never uncovered before
  • For investors, concentrating singularly on their asset allocation could be their own heuristic catalyst for seeing future change and success
  • It’s all about cutting through different variables and complexity to seeing to the core of a system through one focus—a method that can also be applied to other areas of life

 

Seeing Hidden Depths… Into the Forecaster, Not the Future

  • 2018 saw wave on wave of predictions being disproved: from Trump leaving office, to a brighter economic wave, and Bitcoin advancing in price ten times over
  • All these forecasts and more, made by experts, were negated throughout last year—any that came true were likely more through accident over prescience
  • You will gain more insight about the forecaster you listen to than any meaningful help on the future of the market

This article was originally featured on Become A Better Investor.

Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form—and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.

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