Capitalogix

Twelve Mistakes That Contribute To Poor Decision Making

Here are twelve mistakes that contribute to poor decision making.

1. Selective Search for Evidence: Gathering facts that support pre-determined conclusions, but disregard other facts that support different conclusions.
2. Premature Termination of Search for Evidence: Accepting the first alternative that looks like it might work.
3. Inertia: Being unwilling to change old thought patterns.
4. Selective Perception: Prematurely screening out information not assumed to be useful.
5. Wishful Thinking: Wanting to see things in a positive light.
6. Recency Effect: Putting undue attention on recent information and experience while minimizing the value of information collected in the past.
7. Repetition Bias: Believing what’s been stated the most often and by the greatest number of sources.
8. Anchoring and Adjustment: Being unduly influenced by initial information that shapes your view of subsequent information.
9. Group Think: Conforming to peer pressure or the opinions of the majority.
10. Source Credibility: Rejecting input from sources prematurely judged to not be credible (or not “cool” or “in sync with the way you do business.”)
11. Attribution Asymmetry: Attributing success to your team’s abilities and talents, but attributing failures to bad luck and external factors.
12. Role Fulfillment: Conforming to the decision making expectations others have of someone in your position.

 

Related articles

Decision-Making And The 10 Most Common Psychological Biases Of Investing

Avoiding Psychological Bias in Decision Making - How to Make Objective Decisions

More information might not improve your ability to make decisions

How Jeff Bezos Makes Decisions

Here Are Some Links for Your Weekend Reading

The Obamacare website fiasco is still capturing the imagination of cartoonists.

 

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• The Habits of Successful People: They Start Before They Feel Ready. (Buffer)
• When You Are Innovating, Resist Looking for Solutions. (Harvard Business Review)
• A Surge in Growth for a New Kind of Online Course. (NYTimes)
• 15 Free Online Courses That Are Actually Worth Your Time. (BusinessInsider)
• 5 Infamous Tech Predictions. (Forbes)

 

Trading Links:

• Is Hyperinflation Just Around The Corner? (Forbes)
• Economic Conditions Snapshot. Optimism for the global economy is increasing. (McKinsey)
• China to Allow Hedge Funds to Raise Money and Invest Overseas. (Hedgeweek)
• The Case for Systematic Decision-Making. (TurnkeyAnalyst)
• Alternatives a Safe Haven in Changing Investment Game. Making non-traditionals part of "risk-tolerant, panoramic portfolio" (InvestmentNews)

How the Economic Machine Works [Ray Dalio Video]

Ray Dalio leads one of the world's largest hedge funds, Bridgewater Associates.

To explain how the economy works, Dalio has put together a 30-minute animated video called "How the Economic Machine Works," where he narrates his big-picture view of the economy, which he claims works like a simple machine.

"I feel a deep sense of responsibility to share my simple but practical economic template," Dalio says. "Though it's unconventional, it's helped me to anticipate and sidestep the financial crisis, and it has worked well for me for over 30 years."

Here is the video.

 

 

 

According to Forbes, Dalio is worth almost almost $13 billion, so it's safe to say his economic template has served him well.

 

Related articles

Ray Dalio Shares His View of the World at the Bloomberg Markets 50 Summit

Where Microsoft Makes Its Money

Microsoft released some interesting stuff this week.

The update to Windows 8 is here.

 

 

They released an app that lets you control your desktop from your iOS or Android device.

Also, here is a chart that shows where Microsoft makes its money.  For someone that doesn't pay that close attention to micro moves coming out of Redmond, the chart is somewhat surprising.

On one hand, notice that Microsoft's Windows franchise (which was once dominant) is now stagnant. On the other hand, it's easy to see that there is much more to Microsoft than just Windows.

 

 

As you can see, the Office business, and the Server & Tools business are both bigger than Windows and growing at a healthy rate.

 

Related articles

Microsoft's Entire Windows Strategy Is Based on This Premise

#Infographic: Microsoft's history

These Are The Four People Microsoft Has Talked To About Becoming CEO (MSFT)

Here Are Some Links for Your Weekend Reading

The Markets are up and the Government is open again; so everything must be fine.

 

 

 

Here are some of the posts that caught my eye. Hope you find something interesting.

 

Lighter Links:

• The Daily Routines of 7 Famous Entrepreneurs and How to Design Yours. (BufferApp)
• Richard Feynman: Eccentric Genius on Life, the Universe and Everything. (Telegraph)
• We've Found Water on Mars—Two pints per cubic foot of soil, to be exact. (Newser)
• If We Meet Aliens: What to Do? The Ethics of Interstellar Encounters. (Discovery)
• 10 Siri Tricks To Help You Be Your Most Productive Self. (Openforum)

 

Trading Links:

• Why Every Small Employer Should Sign Up For Obamacare's SHOP Exchange. (Forbes)
• T. Boone Pickens No Longer a Billionaire - Forbes List. (BusinessInsider)
• High-Frequency Trading: Business Gets Tough for Wall Street Gunslingers. (FT)
• This Sociological Theory Explains Why Wall Street Is Rigged for Crisis. (The Atlantic)
• Twitter I.P.O. May Set Stage for Resurgence in Tech Offerings. (NYTimes)

Visualizing the Federal Shutdown In One Chart [Live Infographic]

This dashboard shows the effects of the current Federal Government shutdown.

The stats at the top are updated live based on average figures multiplied by the time since the shutdown began.

 

 

 

To get a sense of the overall situation, the treemap graphic shows which federal employees are still at work, and which are furloughed.

Here Are Some Bets You Will Always Win

There are some games you shouldn't play if the odds are stacked against you.

Here are some clever ways to to get an edge.

 

 

 

 

And here are a few more you can use with your friends.

 

 

 

For more, go to the Quirkology page.

Dow Jones Industrials Still Trading Above Key Support Levels

This week, the Dow Industrials bounced-off its 200-day moving average and technical traders relaxed a little.

Earlier in the week, a number of U.S. stock indexes briefly slipped below their 50-day averages. Despite the Shut-Down, they have bullishly regained those support lines.

A key example took place in the Dow Industrials. The chart shows the Dow bouncing off initial chart support at its late August intra-day low (14760) and its 200-day average (red line). For technical traders, that is a very important test.

 

 

The sharp rally has kept the Dow above those two important support levels. 

 

Related articles

Market Has Reached Major Inflection Point

128 Years of Dow Components

RICHARD RUSSELL: Here Are 2 Reasons Why I'm Not Buying The Latest 'Dow Theory' Buy-Signal

Here Are Some Links for Your Weekend Reading

The new red line hurting our government ...

 

 

Here are some of the posts that caught my eye. Hope you find something interesting.

Lighter Links:

• Get Your Team To Fail More – and why that is a good thing. (Harvard Business Review)
• U.S. Says Iran Hacked Navy Computers. (Wall Street Journal)
• That Time Vladimir Putin Beat a U.S. Congressman In a Drunken Arm-Wrestling Match. (Slate)
• Why Your Parents Hate Your Spouse. Hint: it’s all about the genes. (TIME)
• Timelapse of the Imperceptible Effects of Aging Created from Family Portraits. (Colossal)

 

Trading Links:

• The New Forbes 400 for 2013: Facts and Figures on America's Richest. (Forbes)
• How Every NFL Owner Made Their Money. (The Week)
• Derivatives Trading Safer and More Efficient, Says Citadel. (FT)
• Home Prices Surged Across U.S. in July, up 21% in L.A. (LATimes)
• Lessons From Sun Tzu's The Art Of War For Your Trading. (BigTrends)

Related articles

Tracking The Forbes 400: A Decade's Look At Where The Country's Richest Live

One Of The New Additions To The Forbes 400 List Made Billions Refinancing Underwater Homes

FORBES: T. Boone Pickens Is No Longer A Billionaire

Why the Markets Are Not Showing Much Fear ...

With the government shut down and the debt ceiling looming, one could argue that the U.S. economy may be on the edge of a crisis.

But the stock market is not reflecting this.

 

 

During periods of crisis and high stock market volatility, correlations among stocks increase. In other words, stocks move up and down together.

JP Morgan just published a quarterly market chartbook , which includes a useful chart tracking stock market volatility and correlations among stocks since the Great Depression.

 

Why?  Perhaps Because Markets Tend to Go Up After Government Shutdowns.

We are in the 18th government shutdown in US history. 

 

For some perspective, this chart plots the average S&P 500 performance for the 20 trading days (approximately one calendar month) before and 60 trading days (approximately 3 calendar months) after a government shutdown began.

 

 

 

The chart illustrates a bullish pattern.  While the stock market has tended to struggle prior to and during the initial three days following a government shutdown ... Following this, the stock market has (on average) trended higher over the ensuing three months. 

 

One explanation for this particular average pattern is that the market abhors uncertainty. So as the shutdown approaches, investors fear for the worst. However, after the shutdown begins and investors notice that the economy continues to function (coupled with the fact that the shutdown may be short-lived) ultimately encourages a stock market rally as investors worst fears are not realized. 

 

It should be noted that this chart is an 'average performance chart' and that following the last 17 shutdowns, the stock market traded up 60 trading days after a shutdown on 10 out of 17 occasions (i.e. 58.8%) with the average shutdown lasting 6.4 calendar days.

Related articles

All Stock Market Roads Lead to the Debt Ceiling

All Of The Craziness In Washington Has Brought Calm To The Markets

Obama and Wall Street

CITI: The VIX Is Wildly Misunderstood And Misinterpreted (VXX, VXZ)

Wall Street Responds To The Government Shutdown