Here's an optical illusion WITH an explanation of how it works. Yet even after reading and understanding the explanation, can you really 'unsee' it?
Optical illusions are a great example of 'Just because you understand it, doesn't mean you can get rid of it'...whatever type of bias, illusion or anomaly you're talking about.
Intellectually understanding something like this doesn't help you unsee it or purge it from your behaviour.
The great Daniel Kahneman, who has won the Nobel Prize for his work on human biases, says that his decades of work in the field have barely changed his decision-making!
That's because most biases served an evolutionary purpose. For example, the loss-aversion bias where we dislike losses more than we enjoy a similar level of profits was important as a hunter-gatherer because doing this kept you alive. You wanted to 'overreact' to the possibility of a sabre toothed tiger even if it turned out to be a false alarm.
Others were simple shortcuts as a result of evolution. For example, many optical illusions rely on the fact that our brains assume that light comes from above because that assumption worked most of the time. As they say 'Evolution is a hacker not a designer/engineer'
The issue is then this: Your biases are hardwired - even though they may sabotage your investment journey. Evolution frankly doesn't care about that - it's purpose is just to keep you alive.
There is only one way to get past them: to have a proper system and to follow that system. This was the understanding that took us towards the evolution of our unique Human + Machine (AI & ML) model of investing.
From the desk of Devina Mehra
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Economists Think Dollar's Fall May Explain the Recent ‘Rally’ by Steve Liesman
Einstein taught us about relativity in nature. Now come Devina Mehra and Shankar Sharma of First Global to teach us about relativity in financial markets -- and raise some serious questions about just what is driving stock prices.
First Global reports are quite credible and, on occasion, more than that.
What prompts this mention is Intel's earnings report and the fact that First Global has had a pretty good bead on the company and its stock.
AMD up again following First Global upgrade to ‘buy’ (AMD) By Tomi Kilgore
Analyst Kuldeep Koul at First Global upgraded Advanced Micro Devices (AMD) to "buy" from "outperform," given the "exceptional traction" that the chipmaker's Opteron line of processors has been able to get.
Baidu Climbs on First Global’s ‘Outperform’ Outlook
Baidu Inc., the operator of China’s most-used Internet search engine, rose to the highest price in two weeks after First Global rated the shares “outperform? in new coverage.
Personality counts: Walmart's frugal, but Target charms
"It's better to take a slight hit on [profit] margins and keep on moving and inventing," says First Global Securities. And at least for now, Target is inventing in a way that appeals to consumers with money to spend.
At 11 times trailing earnings, Energizer is cheaper; Gillette's multiple is 25. But cheaper doesn't mean better, says First Global.
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