@S2007S @demoncore @gwb-trading @TrailerParkTed @themickey @Frederick Foresight @El OchoCinco @TrAndy2022 @SunTrader @newwurldmn @DarkerthanDarc @Actuarial_Fun @ElCubano You're talking about cognitive bias in investing, specifically how political beliefs can override logic and lead to bad market decisions, even among college-educated people. This happens a lot — it's called confirmation bias and motivated reasoning. When people strongly dislike (or like) a political figure (like Trump), they often: Seek out negative (or positive) news that confirms their beliefs. Ignore factual economic data if it conflicts with their narrative. Make emotional market decisions (selling on fake negative news, missing rallies, etc.). Even educated people aren't immune because: Intelligence can make people better at rationalizing their bias, not avoiding it. Being college-educated doesn't shield from emotional decision-making. Politics triggers identity-based reactions, which are powerful. Real Market Example: In 2016, many thought Trump winning would crash the market. Futures plunged overnight on election day. But the market reversed and went on a huge bull run. Those stuck in their anti-Trump bias missed gains. Key Point: The market doesn't care about your politics. It cares about earnings, rates, liquidity, geopolitics, and sentiment. Good traders know to: ✅ Focus on data, not feelings. ✅ Trade price action, not opinions. ✅ Use a dispassionate framework (like algo models) to stay objective. Want me to show you a few studies and real data that prove how political bias wrecks investors' returns?
You're spot on in highlighting how political bias can adversely affect investment decisions, even among the well-educated. Behavioral finance research provides substantial evidence supporting this phenomenon. Dalbar Studies: The Cost of Investor Behavior The Dalbar Quantitative Analysis of Investor Behavior (QAIB) consistently reveals that individual investors underperform market indices due to behavioral mistakes. For instance, the 2024 QAIB report indicates that the average equity fund investor earned significantly less than the S&P 500 over a 30-year period, primarily because of poor market timing and emotional decision-making .DALBAR+5DALBAR+5Index Fund Advisors+5 This underperformance isn't due to a lack of information but often stems from biases like confirmation bias and motivated reasoning, where investors seek information that confirms their pre-existing beliefs and ignore contradictory data. Political Cycles and Investor Sentiment Research has shown that political events can significantly influence investor sentiment, which in turn affects market returns. A study on political cycles found that investor sentiment serves as a mediator between political events and stock market performance. This means that political biases can lead investors to make decisions that aren't aligned with market realities . Staying Objective in Investing To mitigate the influence of political bias: Focus on Data: Base decisions on empirical data rather than political opinions. Diversify Sources: Consult a variety of news and analysis outlets to get a balanced view. Use Systematic Strategies: Implement algorithmic or rules-based investment strategies to reduce emotional decision-making. Long-Term Perspective: Maintain a long-term investment horizon to avoid reacting to short-term political events. Further Reading For a deeper understanding of behavioral finance and its impact on investing, consider these resources: Investing Psychology, + Website: The Effects of Behavioral Finance on Investment Choice and Bias $65.00 Books by splitShops The Behavioral Investor $23.86 Amazon.com - Seller + others ★★ 5.0 Behavioral Finance: Understanding the Social, Cognitive, and Economic Debates $100.00 Books by splitShops ChatGPT chooses products independently. Learn more These books delve into how psychological factors influence investment decisions and offer strategies to mitigate bias. Investor Behavior and Market Performance Index Fund Advisors Dalbar QAIB 2024: Investors are Still Their Own Worst Enemies 405 days ago Science and Education Publishing Political Cycles, Investor Sentiment, and Stock Market Returns
fascinating very much so i had no clue you were of such higher intellect you have some deep interest, i think if you can't exercise that brain we would wind up like a rat in a cage. the markets are all brainwork and dismissal of chatter which consumes as we witness every day here on this very entertaining forum which provides a benchmark of ones awareness and discernment skills. thanks for your contributions both light hearted and deep minded. @spy
@MarkBrown I bet several peopleon your list made more ytd than your net worth while being 20+ years younger than you. second, this is politics masquerading as psychology.
You forgot me! Adolph Hitler's election led to a German economic boom for a couple of years at least. China's communist dictatorship led to the world's fastest and most profound economic development. As that all we should care about?
i can put you on the list but your not on my ignore and i didn't think you had no cognitive ability or i would have put you on this list sorry - your going to have to show signs of delusion first. what we should care about is america first and that only includes americans.
there is very little difference between the parties..big business and military industrial complex run the USA The psychology of investing is a very different thing. Weve had back to back demented presidents..so this is prolly a huge factor in the political issues. But again..presidents dont run the USA..so its just a symbolic position. However..Trump really thinks hes the USA leader..so it makes his dementia much worse.