The disposition effect with professional traders

The disposition effect

We chat to Terry Odean, a prolific researcher, about the perils of overtrading, the disposition effect, and how it leads to overconfidence.
Navigating uncertainty

Navigating uncertainty

We chat to Garth Mackenzie, an experienced trader, on how to navigate uncertainty in our trading and investing decisions.
prefer avoiding losses

Loss aversion

We chat to Dr Greg Davies about loss aversion; it's a bias that costs us money so we need to guard against it.
risk tolerance risk

Embracing risk

We chat to Steve Ward about risk tolerance; what part our personality plays and what part is influenced by external factors.
equity home bias puzzle

Home bias

We invest close to home and in what we know. But this lack of diversification results in missed opportunities. Say hello to 'home bias'.
Money Illusion cover

Money illusion

Money illusion is a sneaky bias. It causes us to focus on the amount of money in our hands, rather than it's purchasing power.
What are the commonly recognized systematic biases?

Behavioural biases unpacked

We wrap up season 1 of the podcast and hear about all the behavioural biases that each of our interview guests have fallen prey to.
The anchored trader

The anchored trader

Anchors tie us down and can have serious consequences for investors and traders. Don't be the anchored trader.
Narrow framing cfa

Narrow framing

Narrow framing, the compromise effect, glossing, and the enabling frame. We need frames to make sense of the world. But they cause problems.
Social media echo chamber

The social media echo chamber

The rise of social media and fake news is impacted by confirmation bias. It's known as the social media echo chamber effect.
The overconfident investor

The overconfident investor

We need to discuss the overconfident investor. He makes some poor investing decisions. But fear not, we're here to help!
System 1 and System 2

System 1 and System 2

This post unpacks the workings of our brain, commonly referred to as System 1 and System 2 thinking. We chat to Dr Daniel Crosby to get some further insight.
Failing to plan is planning to fail explain with examples

Failing to plan is planning to fail

Our irrational behaviour, risk aversion and lack of motivation cause us to fall short with our financial plans. Have a plan!
How to manage your debt

How to manage your debt

Lifestyle creep and easily available debt can easily lead to overconsumption and insufficient savings. Let us help you learn how to manage your debt.
Inflation and compound interest

Financial literacy

Don't be financially illiterate. Allow us to take your through some quick explanations and examples on inflation and compound interest.
Behavioural finance podcast

Welcome to the podcast

Welcome to our new podcast where we'll help you identify your behavioural biases and give you tools to limit poor decision making.
Mental accounting bias behavioral finance

Mental Accounting

Money is money! Or is it? Mental accounting says we place different values on different money which leads to irrational decision making.
What are my options at retirement

Retirement options

Let's recap some of the key points to ensure you understand all your retirement options and make the best decisions with your money.
Blending living and fixed annuity

Blended annuity

A blended annuity is a combination of a living annuity and a guaranteed annuity. The idea is to determine what your essential expenses are.
Which retirement annuity should I take

Living vs Guaranteed

With a living annuity you have less certainty but more flexibility. With a guaranteed annuity you have more certainty, but with some limits.
Types of lifetime income

Different types of guaranteed annuities

Different types of guaranteed annuities give you different increases each year. Compare that to your starting income.
Fixed annuity

Guaranteed annuities

Guaranteed annuities are essentially an insurance product. They guarantee you an income for the rest of your life!
Living annuity in retirement

Living annuities

With living annuities - the most important thing is that you understand the implications of how much you're withdrawing each year.
Retirement decisions

How much cash do I take?

The first question you'll ask at retirement is "how much cash do I take"? Let's help you answer that with this 4 minute video.
Video series on preparing for retirement

Preparing for Retirement

This is the first post in a short video series covering everything you need to know to start preparing for retirement!
Representative heuristic

Stop stereotyping

Representativeness heuristic refers to the fact that we stereotype. It’s a mental shortcut. But beware of making unfounded comparisons.
risk and uncertainty in economics

Learn to deal with uncertainty

Risk and uncertainty will always surround us. Gambler's Fallacy, the hot-hand effect, the law of small numbers & ambiguity aversion are just some of the biases that arise because of it.
Availability effect definition

We prefer wrong information to no information

Availability bias and survivorship bias influence our decision-making. We make decisions based on the information available to us.
Primacy and recency effects

The power of first impressions

The order of information influences your decisions. First impressions matter! It's all got to do with primacy and recency effects.
Hyperbolic vs exponential discounting

The problem with wanting it NOW

When you delay instant gratification, you will experience long-term satisfaction. That's hyperbolic vs exponential discounting. Don't let present bias win!
Proctrastination is the enemy of success

Procrastination is the enemy of success

We know procrastination is the enemy of success. But while it looks like laziness, it's often just mental exhaustion at play. Learn how to overcome procrastination.
How to improve self control

How to improve self-control

Self-control is an essential life skill. It's what separates humans from the rest of the animal kingdom. Learn how to improve self-control to achieve your long-term goals.
The endowment effect and IKEA effect

What’s mine is more valuable

In this post, you'll learn why you place extra value on things you already own. The endowment effect has implications for our investment portfolio, bonuses and consumer behaviour.
Sunk cost and the concorde effect

When the past influences the future

The Concorde effect is a famous example of sunk cost investment. Too often we invest time, money and energy into something we should've just abandoned.
Examples of regret avoidance

Regret | It’s not a nice feeling

Regret influences the decisions we make and pushes us to conform to social norms. Examples of regret avoidance show us how this makes complete sense yet no sense at all.
Default options and status quo bias

The danger of the default

Default options nudge us to make better decisions. The option of opting out also respects freedom of choice. This post unpacks this notion of libertarian paternalism and the perils of status quo bias.
Anchoring effect examples

Anchors pulling you down?

Anchoring bias is a straightforward behavioural bias that causes us to focus on a certain initial value and then make decisions with reference to it. This post looks at some examples of this anchoring effect.
Loss aversion vs risk aversion - risk aversion in decision making

Loss Aversion vs Risk Aversion

Loss aversion vs risk aversion - do you know the difference? This post touches on prospect theory, the disposition effect and impression management.
framing effect examples - framing effect psychology example

Size does matter… when it comes to framing

This post uses framing effect examples to show how framing bias influences the way we interpret information and make decisions.
How to avoid confirmation bias

Why you can’t argue with a Vegan

This post focuses on confirmation bias fallacy and cognitive dissonance theory. It includes tips on how to avoid confirmation bias.
Overconfidence bias in decision making

Mirror, mirror, on the wall, stop telling me I’m wonderful!

This post focuses on the impact of overconfidence bias in decision making. Specifically, we discuss the self-serving bias and the better than average affect to better understand our heuristics and biases.
Heuristics and biases in decision making

Heuristics and biases in decision making

We need to understand how heuristics and biases in decision making affect our relationship with money. Using System 1 and System 2 thinking examples, this post is the first instalment in a series on behavioural finance.
Financial trouble

Financial Trouble | Can’t Catch a Break

We feel like we can’t catch a break because our human nature works against us when we try to stay out of financial trouble. This article discusses 8 financial and behavioural pitfalls for us to be aware of.
Happy staff

Happy Staff | Financial Wellness in the Workplace

This article highlights the reasons why financial wellness in the workplace is important. Employers benefit from happy staff. And happy staff are those with better mental health and increased productivity, both facilitated by being in control of their financial situation.
The disposition effect with professional traders
We chat to Terry Odean, a prolific researcher, about the perils of overtrading, the disposition effect, and how it leads to overconfidence.
Navigating uncertainty
We chat to Garth Mackenzie, an experienced trader, on how to navigate uncertainty in our trading and investing decisions.
prefer avoiding losses
We chat to Dr Greg Davies about loss aversion; it's a bias that costs us money so we need to guard against it.
risk tolerance risk
We chat to Steve Ward about risk tolerance; what part our personality plays and what part is influenced by external factors.
equity home bias puzzle
We invest close to home and in what we know. But this lack of diversification results in missed opportunities. Say hello to 'home bias'.
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About the Author

I am passionate about helping people understand their behaviour with money and gently nudging them to spend less and save more. I have several academic journal publications on investor behaviour, financial literacy and personal finance, and perfectly understand the biases that influence how we manage our money. This blog is where I break down those ideas and share my thinking. I’ll try to cover relevant topics that my readers bring to my attention. Please read, share, and comment. That’s how we spread knowledge and help both ourselves and others to become in control of our financial situations.

Dr Gizelle Willows


Dr Gizelle Willows

 

PhD and NRF-rating in Behavioural Finance