7. June 2009 by Dan Walkow, CFA, CMT.

“How do you feel about the economy today? A little worse, maybe, than you did two weeks ago? But a lot better than you did in March? Things feel better to me too, but I can’t explain exactly why. It might be because for most of last fall, I walked around in an apocalyptic trance, and you can’t keep that up forever. I was bewildered by the breadth and intensity of the financial crisis. Among other odd behavior, I convinced myself that if I learned everything there is to know about things like credit-default swaps and “Pick a Pay” Option ARMS, I could defend myself against a dysfunctional future.”

Great article by Hugo Lindgren at the New Yorker follows on my previous post about investors having too much information. You can find an “expert” to justify any view you want to take. With todays 24×7 stock market TV, the internet and of course aggresive print media using “grab your attention headlines” to sell media you can be excused for wanting to lead a simpler life…

Posted in Economics | No Comments »

7. June 2009 by Dan Walkow, CFA, CMT.

Of course, we now know that more choice isn’t a universal good. Because the brain is a bounded machine - it can only process so much information at any given moment - people actually find excessive choice repellent. When we’re given too many options and no way of distinguishing between them - the different varieties of floss all seem equivalent - we experience a tremor of anxiety, the mild panic of supermarket uncertainty.

Jonah Lehrer comments on a recent study done at Columbia University on how people react when given more investment choices for their retirement programs.

 Bottom line, too much choice tends to make investors “freeze up” rather than enhance their investment experience and investment returns.

I would take that one step further and suggest the major problem investors face today is ” too much information” when it comes to making investment decisions. The Internet along with aggressive marketing programs by investment service providers lead to more confusion and subsequently “more stress” for investors.

Posted in Investments | No Comments »