As humanity emerges from the most recent crisis, we will read about how things have forever changed. People will write about the impact on how we work, commute, interact, and shop, as well as how the economy and markets will be affected. One thing that will remain constant, however, is human behaviour. Morgan Housel shares his…
Tag: Prediction
Your Guess Is as Good as Mine
From February 19th to March 23rd, the S&P 500 plummeted -34 percent. From March 23rd until time of composition, the same index climbed approximately 50 percent. Do not confuse this as a net gain. (Refer to our blog series on risk and volatility for how path dependency is important for the geometric compounding of investment…
Preparation vs. Prediction
After a precipitous decline from February 19th to March 23rd, equity markets have rebounded significantly. Simultaneously, oil prices and volatility have experienced extreme fluctuations, central banks are implementing waves of stimulus, and governments are considering the relaxation of social distancing restrictions. This leaves many investors, including the famed and veteran varieties, unsure on a path…
Confusion Amid the Rally
Beyond COVID-19 updates, current headlines are littered with reference to underwhelming economic data, such as spiking unemployment and suffering corporate profitability. During this period, equity markets have seen one of their best stretches of historical performance, which is leaving many investors puzzled. A recent article in the L.A. Times speaks to this phenomenon and attempts…
Superforecasting: The Art and Science of Prediction
Making predictions and forecasting the future are integral parts of everyday life, yet it’s unlikely individuals realize the amount of predictions one makes in a day. The use of heuristics or “rules of thumb” are ingrained in human psychology and help people quickly determine courses of action with limited information at their disposal. Deciding what…
Cutting Through the Noise of Financial Media
Given the recent bout of volatility in equity prices, there has been an abundance of financial pundits forecasting the next global recession is surely upon us. Trade war tensions heating up, global economic activity slowing, and yield curves around the globe inverting are the fodder for click-bait style headlines forecasting a sharp decline in equity…
The Role of Psychology in Investment
The argument could be made that prediction is at the heart of every investment decision. At a very high-level, you are providing capital to a company and predicting that you will earn a reasonable rate of return on your investment; however, this is by no means guaranteed. Morgan Housel from the Collaborative Fund wrote a…