Here’s my latest investment psychology video tutorial on this risks of “mental accounting.” It’s a common term in investment psychology and one worth learning more about.
Archive for the ‘Investment Psychology’ Category
Investment Psychology Video: The Risks of Mental Accounting
Friday, February 18th, 20118 Ways to Great Highlights
Thursday, February 10th, 2011In this video I present some of the highlights from my latest book, 8 Ways to Great - Peak Performance on the Job and in Your Life. It’s now available in print, audio and Kindle editions.
Women on Wall Street: Hard Wired for Success
Wednesday, February 2nd, 2011
In this first excerpt from Gotham Media’s “Women on Wall Street” panel, I speak with Bloomberg BusinessWeek’s Sheelah Kolhatkar about how and why women may be “hard wired” to be better risk takers than men.
NYT’s Abby Joseph Cohen Interview
Tuesday, February 1st, 2011
Investment Psychology and Abby Joseph Cohen
In Sunday’s New York Times Magazine Goldman Sach’s Abby Joseph Cohen subjected herself to an interview with the Times’ Deborah Solomon. You can read it here. My comments on the piece are below.
Good for you, Abby. While Deborah stated that the interview was about your life, I think she missed the point because your life is distinguished by your accomplishments on Wall Street and as one of the most influential women in the financial industry. Why Deborah chose to focus on the old story and overplayed notion of “People on Wall Street are way over paid and let’s blame Goldman and Wall Street for world crises” is beyond me. My God, can people start to focus on the future rather than re-living the past?
As you correctly pointed out, there is no single catalyst or entity or person for that matter that caused the recent financial crises. To suggest this would be incredibly naïve and simplistic. I believe you are 100% correct that Wall Street and the financial markets are tremendously misunderstood by the masses.
As an investment psychology advisor, I think the true value in this interview was touched on in the first few questions about discussing the gender inequality on Wall Street. I only wish Deborah had continued on that line of discussion because it is current, relevant and compelling. I not only believe that Wall Street and the financial industry should make concerted efforts to bring more women into risk taking roles; but as a peak performance coach to many of the elite in the financial world – I believe that women are actually psychologically hard-wired to be better at risk taking jobs then men. I have stated this openly in the media numerous times over the past few years.
Deborah, c’mon. You had a great chance to advance a much-needed discussion by interviewing one of the great women of Wall Street and instead you squandered it on a line of questions that are, quite honestly, too over-played in the media.
And Abby, I admire the composure you kept in the interview and hope to some day have an opportunity to dig into the much more compelling story behind ways to enhance the role of Women on Wall Street.
Going With The Thundering Herd?
Tuesday, January 25th, 2011
Investment Psychology and the Thundering Herd
“Making money is easy, it is keeping it that is hard.” - Dr. Doug Hirschhorn
Keeping the profits is what successful trading is all about. It’s not about making money. It is about risk management. Good risk management translates into good profits. Great risk management translates to great profits and a long-term career.
So what about the herd mentality?
You have all heard about it over the years. Psychologists talk about it all the time, but how does it play out in the applied trading world?
The cliché is that following the herd is dangerous - bad for trading and leads to huge losses.
But my perspective is different and one that states that following the herd is bad only if it was not YOUR game plan. You see, traders don’t mind losing money. That’s right. They don’t. What they mind is losing money doing stupid things. And one of the stupidest things a trader can do is to follow someone else’s game plan instead of their own.
If you are going to lose money (and you are going to about half the time) then you might as well lose it doing the right thing, which is listening to YOUR ideas. Your instincts. Your research and YOUR game plan.
Trading is not complicated. We make it complicated.
Simplify the process. Break your trading down to its basics and follow your plans. And if your plans happen to be in line with the herd, then so be it. And if they don’t, that is fine too. The point is to be consistent in your approach and let the market come to you.
We are in the midst of great trading markets. Volatility creates opportunity for those who remain offensive-minded. Gold, Oil, Nat Gas, the Euro, fixed income, equities….You name it. Opportunity is everywhere – the only question is if you are going to be able to filter out the noise, establish your game plans, execute them and then have the courage to stick to them.
