Behavioural biases and the effect of human psychology on rational decision making is a topic often discussed in investment management. Both retail and institutional investors are impacted by their psychological wiring, but most of the time the discussion centers around how investors can mitigate the impact of negative behavioural biases on their investment decision making….
Tag: Recency Bias
Guarding Against Recency Bias
In last week’s issue, we touched upon “recency bias” and how this cognitive phenomenon can provoke irrational trading behaviour in investors. Because of recency bias, investors can be susceptible to what is known as “headline risk,” putting more weight on new information regardless of whether it is valuable or effectively just noise. Enterprising Investor recently…
Do Zero-Cost Trades Actually Benefit Investors?
– SPECIAL EDITION -Last week in Sagacious, we commented on the recent move by Charles Schwab and TD Ameritrade to cut trading commissions to zero on stocks listed in North America. Our initial thoughts and comments were on the potential for negative externalities, regarding how market structure may be impacted by brokers selling order flow….