Behavioral Finance Archives - Wealthspire

One of our least favorite things about investing is the remarkable imprecision of language. There are so many terms like "risk," "momentum," "smart beta", and "asset class" (among many others) that have no precise definition-- and yet, everyone assumes they know what those terms mean. We were thinking about this recurrent complaint while being barraged with articles and narratives about the inevitable coming "recession." While we don't want to seem callous, our concern is with the effect of a "recession" on portfolio returns, not the actual economic effects. Assuming the next "recession" is more of the garden variety and not…

It was just over six months ago that we penned a piece about the then market sell-off, cautioning against knee-jerk reactions to short-term headlines such as “Worst December Since 1937” amongst others. Well, it did not take long. At 4:01 ET on Friday, June 28, a headline flashed across the Bloomberg terminal: “S&P 500 Has Best First Half of Year Since 1997.” This time around, we again urge calm, in this case against the fear of missing out, or FOMO. We often write about why we choose to be strategic investors, and will not rehash it all here, but there…

“Before, You Are Wise; After, You Are Wise. In Between, You Are Otherwise.” -David Zindell Most of us are attracted to round numbers.  Attentions peak around calendar years and familiar anniversaries that have meaning beyond the numbers themselves.  Rarely do we celebrate someone being at a company for 28.14 years or ask about performance over the last 3,147 days, but we do celebrate 20-year reunions and the beginning of a new century.  So, for a society fond of round numbers, the opportunity arrived in early March to count and reflect.  Ten.  In our experience, ten is the number kids get…

In the grand scheme of things, this holiday season was probably no different from those of the past. Like many others, my family went through some combination of joy, distress, kindness, alienation, reconciliation and everything in between (sometimes all in a matter of minutes). Ultimately, the kids were happy to be out of school and together with the family, and although they occasionally fought and complained, there were still glimpses of heartwarming Rockwellian moments. On the other end of the spectrum, the adult dinner conversations were probably more Orwellian in nature, highlighting how polarized any discussion can become. The topics…