The forces. Not the headlines.
Analysis and commentary on markets, companies, and the forces that move them.
Why Optimism Is Hardest to Recognise at the End of a Bull Market
That optimism peaks near market highs is almost self-evident in hindsight. The difficulty is that at the time, optimism never arrives dressed as optimism. It presents itself as a calm reading of the facts.
How Herding Changed Once Information Became Abundant
Herding has always been understood as copying what other people decide. Once the supply of information vastly exceeds anyone's capacity to process it, herding changes shape. What gets copied is no longer other people's positions but their attention.
How Social Media Alters an Investor's Sense of Time
Investing operates on a scale of years. Social media operates on a scale of minutes. When the second becomes the primary source of information about the first, the conflict between them does not stay at the level of information.
Everyone Endorses Long-Term Holding. Almost Nobody Practises It.
Long-term holding enjoys wider agreement than almost any other principle in investing, and a lower rate of practice than almost any other. The gap is not a failure of knowledge. It is built into the way the principle is stated.
What Actually Triggers Panic Selling
Panic selling is usually attributed to the size of a decline. Observed behaviour suggests the trigger is more often how long the decline lasts than how deep it goes.
Anchoring to Your Cost Basis
The cost basis carries less information about an asset than almost any other number in a portfolio, and is looked at more often than almost any of them. That contradiction explains a great many otherwise puzzling decisions.
How Losing Positions Get Reclassified as Long-Term Investments
The holding period for a given position is rarely settled at the moment of purchase. Far more often it is established retrospectively, once the position has moved against its owner.
The Overweighting of Expert Opinion
How reliable professional judgement turns out to be depends on what kind of feedback a field provides. Markets supply feedback that is slow, noisy and frequently misleading, which changes how experience accumulates there.
How a Narrative Replaces Analysis
A good story travels through a market far faster than a good analysis. The reason has little to do with diligence. Stories possess two properties analysis lacks: they survive retelling intact, and they can shed their conditions.
How Investors Rewrite Their Own Expectations
Memory works by reconstruction rather than storage. Every act of recall quietly revises the original expectation in line with what is now known. The process requires no intention to deceive.
Position Size and Emotional Intensity
Doubling a position does not double the emotional response. The response stays nearly flat below a certain threshold and rises sharply above it, and that threshold varies by person and is seldom measured.
Why Information Consumption Spikes During Declines
Readership of market information peaks during declines. The quality of market information reaches its low point across the same stretch. The coincidence in timing is no accident.
How Echo Chambers Harden Mistaken Views
Hearing the same argument repeatedly registers in the mind as independent evidence accumulating. Where the repetitions originate from a single source, the confidence that accumulates has nothing underneath it.
The Two Forms of Fear of Missing Out
Fear of missing out is usually described as an urge to buy into something. Its more common form appears in people who already hold the asset, and it is far better disguised.
Why Investors Remember the Calls They Got Right
Memory preserves forecasts selectively. Correct forecasts come with clear cues for recall. Incorrect ones lack any occasion that would bring them back to mind.
Paper Losses and Realised Losses
The same sum of money carries a different psychological weight on paper from the weight it carries once realised. The difference has no economic basis and influences decisions with great consistency.