Feeling apprehensive? That's good.

Certainly uncertain

Ever been put off by the overconfident sales person who expresses complete certainty about everything? 

I don’t just mean car salesmen or real estate agents. We can include many a transaction-based dialogue, from insurance brokers to shop assistants. Early in the year, otherwise respected market commentators turn to flawed futurism as they come under pressure to forecast what’s ahead.

I prefer those who are confident but also realistic. It turns out most people do.

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Are strong opinions that useful?

Firmly held ideas don’t have a great track record.

Strong opinions have little to commend them. They’re correlated with high blood pressure, anxiety and depression. Psychological studies say they are associated with ego rather than evidence and can be blamed for poor decision-making in times of stress.

Yet we all have opinions, some of them quite useful. Where is the line between dysfunctional self-belief and a healthy point of view?

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Picking Winners

Making decisions in times of rapid change

Why do managed funds invariably underperform the stock market? Even hedge funds – allegedly run by the smartest people in the room – have pretty poor performance.

Despite rigorous analysis, their decisions are still a guess. What’s more, it’s not a guess about whether they are right. It’s a guess about whether or not other people think that other people will think they are right.

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Stressful Decisions

The problem's inside our own heads.

On Friday, 16^th October, 1987, I ended a prosperous week with a few drinks at the Singapore Cricket Club. Our stock broking firm was flourishing. I was young, reasonably arrogant, and a millionaire.

On Monday morning, Asian share prices collapsed. Global markets did likewise that night. By Tuesday morning I was in debt.

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Timing and luck

Are successful people right, lucky or both?

In the mid-1980s, I listened to Nobel prize-winning finance professor, William Sharpe, address the Hong Kong Society of Securities Analysts.

Sharpe was one of our heroes, having developed the Capital Asset Pricing Model, or CAPM. (We don’t need to go into that here but for investment geeks CAPM is up there with sex).

Then the professor told us it was impossible to consistently beat the market.

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