Homer Simpson or Spock: What Type of Investor Are You?

Thaler said that traditional economic theory assumes everyone is “super rational, has no self-control problems, never has a hangover, saves the exactly the right amount for retirement and then invests it perfectly.” Then he hit on the most brilliant, and yet common sense insight, I've ever heard on investing. Thaler said, “We're more like Homer Simpson than we are like Spock (the always logical Vulcan on the original Star Trek that was usually in full control of his emotions).” For link to full article: click here

Nobel-winner Richard Thaler’s theories are helping these funds beat their benchmarks

Click Here for Full Story A Nobel Prize in economics doesn’t necessarily translate into money-management prowess. However, a pair of mutual funds based on Richard Thaler’s groundbreaking work in behavioral finance, which earned him the Nobel in economics earlier this month, are putting in solid performances, so far. Thaler is a principal at Fuller & Thaler Asset Management, which defines behavioral finance as “the combination of cognitive psychological theory and conventional finance to provide explanations for why people make irrational investment decisions.” This firm is the investment adviser behind the Fuller & Thaler Behavioral Small-Cap Equity Fund FTHNX, +1.25% a mutual fund that “aim

How to Profit from Behavioral Economics

It’s easier to limit your own mistakes than to exploit everyone else’s. Click Here For Full Story When people can’t understand what markets are doing, they often turn to psychological phenomena to try and explain it: Think of stock phrases such as “irrational exuberance,” “greed and fear,” and “climbing a wall of worry.” Even economists now widely accept that investors’ mental quirks mess with models of rational decision-making. On Oct. 9, the Nobel prize in economics went to a University of Chicago behavioral economist, Richard Thaler, for exploring the biases and cognitive shortcuts that affect how people absorb and process information.

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