We've launched a new section to our website - Behavioural Finance.
If you ask the average person, they would say that finance and investing is driven by numbers and analysis. Unfortunately, we are all fallible and vulnerable to numerous inherent psychological biases that 1) are documented and repeatable, 2) can completely overwhelm “rational” analysis even when you are aware of the biases, and 3) are compounded by the fact that most people simply do not acknowledge that this happens. When it comes to investing, if these human misjudgements are ignored it will lead to underperformance or even disaster. And even if you are aware you are still vulnerable but at least you have a chance to self-correct.
So here at Canadian Value Investors we are happy to learn from others who have spent the time to understand and document their experiences. Our goal here is to create a list of biases and also relevant case studies that is easy to review and can be used as a checklist/reminder list. We plan to expand this over time.
Our first person profiled is Charlie Munger, Vice Chairman of Berkshire, with most material being from his 1995 speech at Harvard law. Enjoy! And let us know what you think.