Beating The Dumb Money Effect

Investors routinely underperform the indices on which they trade because they do the exact opposite of what we all know is correct – they buy high and sell low. As easy as it is to point out the mistake, it’s much harder to find a solution that investors will stick to. Michael J. Mauboussin, Head of Global Financial Strategies for Credit Suisse Investment Banking argues that investors need a process that takes them out of the rough and tumble of the market and keeps their biases in check.

How the interpreter gets investors into trouble

“There is a part of your brain, in the left hemisphere, that neuroscientists have dubbed ‘the interpreter.’ The apparent role of the interpreter is to assign a...