The Danger of False Beliefs
Top 5 of the Week of March 6
Tadas Viskanta opens up our Top 5 this week with his piece from Abnormal Returns analyzing confirmation bias. A Wealth of Common Sense’s Ben Carlson discusses the impact of our longer life expectancy on retirement horizons. And Ian Allison, writing for the International Business Times, examines the current machine learning revolution and how it transfers over into finance.
Anuchit Nguyen of Bloomberg View celebrates women taking a higher percentage of job roles in Thailand’s world of finance. And Cullen Roche, author of Pragmatic Capitalism, looks at the investing myths behind gold as an asset…
The Danger of False Beliefs
- As investors, we believe we know far more than we actually do, and we enjoy the feeling we get when we find information to ‘support’ our false beliefs
- Sticking to your guns—though you may be wrong—can have dire consequences even if it “feels good to do so”
- One of the reasons we continue to hold onto beliefs—despite being shown evidence that tells us they are false—is our confirmation bias, be aware of this when it comes to your investing decisions
Live Longer and Plan Further Ahead
- Evidence shows that the odds of men and women living past their predicted life expectancy have greatly increased
- This is a mixed blessing, while living longer is, of course, a bonus; people will need to adjust for a much longer retirement horizon financially—problematic if people fail to plan ahead accordingly
- Be aware of the implications; for both sexes in defining your investment portfolios and having longer working life spans, and for women; who are “overlooked in the financial planning world”
“A Toolbox for Learning”
- The financial world is largely about finding correlation and patterns in the stock market, while machine learning is about being able to teach a computer to learn without programming
- So far, the latter has never been used with the former, but recently, studies have attempted to apply machine learning to hedge fund data
- Using this artificial intelligence to “learn” from the information without pre-defining the financial model and then applying it to construct a sound portfolio
Do you believe machine learning has a place in the investing world? Share your comments in the section below
Thailand Defeats the U.S. For Having Women in Senior Finance Roles
- In countries across the world, Thailand come third behind top placing Norway and Sweden for having a high percentage of women in leading finance positions, ahead of both the U.S. and the UK
- While two-thirds of senior management and executive roles are still filled by men, 57 percent of Thailand’s workforce in finance and insurance is female
- The advance in this high statistic may be because feminine traits are more suited to the field as “financial jobs require very detailed and cautious persons”
All That Glitters…
- Positive returns on the price of gold have been a recent occurrence in the last 50 years only, before that its value has been despondent since 1791
- Though this spike in value still does not mean it measures well when you compare its performance against bonds or stocks
- Given its low valuation and lack of diversifying properties, it is difficult to foresee good prospects for gold as a return generating commodity
Top 5 of the Week is a summarized collection of financial investment articles that we like and think you might like too. Having written thousands of pages of equity strategy and company research between us, we understand the allure of the ever-changing world of finance. Investing is an art form—and like everything, something you can work on and improve at. There are some excellent writers out there on the finance web, some offer a running commentary on today’s market, some are doing research, some have tips on how to Become a Better Investor, and some just lift the cloud of fog behind a lot of financial jargon. Each week we will keep you up to date with the top 5 articles worthy of your attention.
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