Nearsightedness deficit, be just the prime cause that invests failure?_News

A lot of people say investment is an art, right. Quantify a test, big data is analysed, AI increases, these are tools, what use these tools finally is investor itself. Again good model or tool, what because use means,also meet is different, and bring about result short of to anticipate. Much research points out, investor is rational far from. The behavior bias of investor, what affecting investor all the time is decision-making.

E.g. , do a lot of investor always feel why is account always behaved bad? Land everyday into account, how to always feel net value did not go up a few are nodded? Actually this follows " impatient water not boil " the argument is same: Mix in the current situation achieve expect the process among, suffer forever. Pay close attention to the current situation too when you, you always can feel the goal leaves you very distant. And your current situation and expectation, what can affect you conversely again is decision-making.

Why investor cannot make best decision-making?

A little test does below us:

Option 1: We toss coin together, positive and negative 2 probability is 50% . If be the front, you can acquire 5000 dollars, the word of the opposite, you will loss 2500 dollars.

Option 2: Give you 1200 dollars now. Yes right, give now.

Can be you chosen which?

According to the research result of Daniel Kahneman of nobel prize winner and Amos Tversky, the person of 82% , can choose option 2. But change theory according to anticipating effectiveness is the biggest, rational investor can cipher out option the anticipation of 1 redound is $1250 dollar, and option 2 it is $1200 dollar.

So so-called be " reason " why can investor still choose to anticipate the option with lesser redound?

". . .Choices Among Risky Prospects Exhibit Several Pervasive Effects That Are Inconsistent With The Basic Tenets Of Utility Theory. In Particular, people Underweight Outcomes That Are Merely Probably In Comparison With Outcomes That Are Obtained With Certainty. . . .. ---Daniel Kaheman And Amos Tversky "Prospect Theory: An Analysis Of Decision Under Risk" , 1979.

This is famous expectation academic (Prospect Theory) , call deficit to detest again (Loss Aversion) .

Why do we detest deficit in investment is calling limitation of a kind of investor (Investor Bias) ?

A lot of people can say, I maintain vigilance to deficit, is this very normal also very accord with logic? Yes, if investor can be before numerous option, evaluate result of avery kind of effectively, below the premise that anticipates profit is the biggest, deficit of effective low control, this is best of course.

But be in actually, because market price case can fluctuate everyday, below the influence that detests in deficit, investor can make best and decision-making probability be sold at a discount greatly.

Come again 2 small experiments:

Experiment 1: You are in 100 when bought a share, as a result this stock fell 80. You have 2 option now:

Option 1: Cut the flesh to agree to pay, deficient 20.

Option 2: Continue hold this stock, the opportunity loss that you have 50% 20, the opportunity that also has 50% earns 20.

Can be you chosen which?

Experiment 2: You are in 100 when bought a share, as a result this stock rose 120. You have 2 option now:

Option 1: Gain profit from, earn 20.

Option 2: Continue hold this stock, the opportunity loss that you have 50% 20, the opportunity that also has 50% earns 20.

Can be this you chosen again which?

The investor of 80% above is in experiment 1 li, 2 - of meeting option option continues to bet; Be in however experiment 2 lis, the investor of nearly 80% can choose option 2 - to gain profit from. But go up in maths, no matter be an experiment 1 still be an experiment 2, the anticipation of 2 option in every experiment redound is same.

So the investor to reason, the option of every experiment is indiscriminate, so why does investor issue next meetings to there is so clear choice preference in different condition?

". . .The Value Function Is Normally Concave For Gains, commonly Convex For Losses, and Is Generally Steeper For Losses Than For Gains. . . Which Exhibits Risk Aversion For Positive Prospects And Risk Seeking For Negative Ones. . . .. ---Daniel Kaheman And Amos Tversky "Prospect Theory: An Analysis Of Decision Under Risk" , 1979.

The bring joy of accrual, in experience on the anguish that is less than a loss to bring; Anticipate redound is when, investor can choose the option with less risk, be when losing, can choose the option with higher risk.

Because deficit detests brought decision-making prejudice,this is planted, have 3 kinds of the most immediate effects to investor:

The first, cannot bear those who cut the flesh is painful. The flesh is not cut when should cutting the flesh, did not stop the mechanism of caustic, bring about often sell the share in the nadir.

The 2nd, cannot suffer short-term loss. Discover value hind, should hold some time sturdily not sturdy, cause the rise in value that unavailable value returns to.

The 3rd, float is filled with premature pocket to be how. Should chase after when going up, do not chase after go up, a 10% prices will run, go up to perch in the market next when, cannot help be being run into again.

In the stock market " 7 be defeated 2 smooth 1 be filled with " , the influence that deficit detests can be in under this in 3 kinds of circumstances by double enlarge:

"Impatient water not boil " . Examine account often, bring about in revealing the impact that detesting deficit too much.

"The investment cycle of nearsightedness " . Because investment term is too short, the probability that causes occurrence loss increases, increased the anguish of deficit then.

"Too onefold invest " . Because the fluctuation of individual assets is very tall, remittent, increased investor to face the time of deficit.

"Impatient water not boil " - stare at Pan Yue much, the deficit in the heart is more.

We next redo checks, look to detest theory according to deficit, examine a storehouse often can bring how old negative effect to investor.

Test hypothesis

Does deficit have much anguish after all? Detest theory according to deficit, deficit brings investor painful feeling, it is 2 times what gain brings. ISO (international organizes ministerial standard) regular 22222 - level of individual fortune program, also approbated this conclusion.

The opportunity that how many there is sees deficit? Examine a storehouse often the investor of deficit situation, than little the investor that examines often, the influence that is detested more easily by deficit. If we visit dish of warehouse everyday, the time that has 252 days one year can be between the anguish of the joy of gain and deficit wander.

The test is regular

Examine a storehouse frequency is respectively everyday, weekly, every months, every quarter and annual.

Examining a storehouse every time when, computation the expression in this cycle: Day redound, zhou Hui signs up for, lunar redound, season redound, mix year of redound.

When this periodic total redound is when losing, we this loss double; If be if, redound is changeless

For instance now is March 2017 bottom, I visited a warehouse, discovery arrives from January 2017 now, my redound is negative 5% , so " of my " psychology redound is in this quarter, it is negative 10% . Contrary, if be 5% , so the redound in my heart still is 5% .

Be based on mark general the true redound of 500 and psychological redound

What meaning is this graph? Blue solid line is mark general of 500 buy hold redound, the dotted line that leave is simulative psychology redound. If you examine a storehouse everyday,what red dotted line represents is, detest theory according to deficit, the redound that your mentally experiences, green dotted line is to look every week, what purple dotted line represents is every the month looks, what shallow blue dotted line represents is every season looks, what maize dotted line represents is to look every year.

If you begin to buy mark general from January 1989, neglect investment completely next this thing, arrive through 28 years in May 2017, when you are ascended again, can discover a money that you invest at the outset, had become 16, year change yield nearly 9.5% . More important is, you had visited a warehouse only inside time of 28 years, passed through countless cycle, mentally does not have the influence that is detested by deficit completely.

Our purpose is not to call everybody this visit a warehouse only all one's life, want to point out from the experiment however: Examine a storehouse the time is more, you go up with the mood in the heart the impact that is fluctuated by the market is bigger.

Every are month, weekly, examine everyday, the effect with very negative to the redound generation that goes up in your heart metropolis, after passing 28 years, although actual redound is, your psychological redound will be negative.

If decrease,see Pan Pin lead, it is every season perhaps examines a storehouse everyday only if, your psychological redound is in after passing 28 years, or.

Be based on on the true redound that card put together points to and psychological redound

Change on card put together points to on, examine a storehouse often the effect that adds deficit to detest is more apparent. Because go up,the bear that card is a model grows bovine weak point, the fluctuation that increases the market is very big, examine a storehouse every time the influence that can be fluctuated by the market.

Look every year only, mentally can be in constrainedly 16 years of adduction. If you examine a storehouse everyday, stare at every day dish, it is 7400 trade inside 28 years day, in having an opportunity 7400 times to expose the trap that detests in deficit, 7400 opportunities are potential make not sensible decision-making.

"The investment of nearsightedness is periodic " : Term is shorter, deficit probability is higher

Time is a knife that kill a hog, if investor does not have longer investment deadline, be immersed in very easily often the condition of deficit. We take mark general first the historical data of 500 does a test, look to fall in different investment deadline, the state of risk and accrual.

In pursueing below, we use mark general 500 indexes, from scroll successive investment deadline of 1 year, calculate all the time scroll is successive 10 years. Scroll is successive 1 year period means, arrive from 1936 2017, investor invests mark general continuously 500 indexes 12 months, every month is done balance again, every month rolls forth; Scroll is successive 10 years period means, on history of 80 years, investor invests mark general continuously 500 indexes 120 months, every month is done in the balance, every month rolls forth. Following plan institute show:

Of ambitious attune is, what what say here is successive 10 years period, not be to bought hold 10 years to come to an end, however 10 years when investor holds to this investment mark, every month needs to do balance again, those who think is investor whether the tenacity that holds to investment.

Can see, spin as what invest time, be in not considerably the loss is average year of case that turns yield below, year the stability bandwidth that changes yield drops continuously: Successive 1 year period average year of stability bandwidth that changes yield for 20% , and successive 10 years period average year of stability bandwidth that changes yield for 6% .

Of our hypothesis redound distributing for standard normal school, can roll out every deadline so inside, occurrence deficit (year change yield to be less than 0) probability. Can see, as year drop of the stability bandwidth that changes yield quickly, average loss probability also shows the trend that drops quickly: From 1 year period in the deficit probability of 28% , drop period 3.6% in.

The graph below described the effect that invests time length more intuitionisticly. Shorter investment deadline fluctuation is bigger, longer investment deadline can reduce stability bandwidth and increase win a range.

We take the redound that card put together points to to check again. The effect that invests periodic accident is more apparent: If average a hold go up 1 year card put together points to, average year of stability bandwidth that changes yield achieved explode 92% of the watch! And average loss probability is close 38% .

Although 1 year period average year change yield to have 29% , but this is mix with sacrificial stability bandwidth get the better of lead those who be premise, a lot of investor cannot stand so big risk. Below the action that detests in deficit especially, this kind of negative effect is met by the enlarge of twice.

Same, if we spin investment deadline, insist to make long-term investment, year the average stability bandwidth that changes yield will drop considerably.

Average hold word of 10 years, year the stability bandwidth that changes yield dropped 6.4% , deficit probability also has 7% only. Although year change redound to only 9% is control, but compound interest of 10 years, can allow a money, grow 2 4 hair 5.

How many investor does we should like to ask have 10 years period year change yield to you can be achieved 9% ?

"Too single investment " : Configuration is more onefold, the fluctuation is taller

The emphasis that we relapse crosses asset to configure importance, asset configuration is exclusive free lunch: Want to set a few kinds of capital fund with inferior dependency only, can achieve reduce fluctuation and rise get the better of the effect of rate. For instance the simplest 60/40 is combined (60% stocks + 40% national debt) .

10 years of national debt of United States of mark general 500 + , balance every months again

Reduce stability bandwidth, can reduce the number that faces deficit to detest.

We with 60% on card put together points to + index of entire market of 40% China national debt, balance every months again, will do a simple substance to configure combination, with different investment time sees this configuration detest the effect of negative effect to quits deficit.

From the point of the angle that invests a risk, the asset after configuring national debt combines a risk to be reduced apparently, no matter be hold 1 year, still be hold 10 years, have bigger improvement, deficit probability drops apparently.

Write finally

Deficit is detested (Loss Aversion) what affecting investor all the time is decision-making. Investor is in when float is filled with, meeting the option with more deflection tall determinism, the hope can maintain profit; And when float has a deficit, often meet the option with deflection low determinism, the hope can bet, earn come back.

And this kind decision-making the bias that go up, brought about investor to be not borne those who cut the flesh is painful, cannot suffer short-term loss, float is filled with premature pocket to be how. Often buy in perch, sell in low.

Deficit detests the inducement that can say the investment behavior bias that is a lot of other: As a result of cannot proper balance invests option every kinds, investor dare not try easily, also dare not abandon easily. Casting hesitate when, sustain pressure, often search recent memory easily (Availability Bias) , oversight the data of overall; Or undue self-confidence (Over-Confident) , or follow suit blindly again (Herding) , make cursory decision; Or it is pure search some kind to consult content (Anchoring) , in an attempt to make fast decision-making.

From subjective go up, we need to realise him behavior bias clearly (Behavioral Bias) , in an attempt to makes investment better decision-making. From go up objectively, changing the way that him cerebra ponders over is very difficult, so we need to carry the kind of systematization, compulsorily reduces him to expose the influence that detests in deficit to fall.

Look less dish, read a book more; Little speculation, much configuration; Do not pay close attention to instantly too. Carry research of a case of a physically strong patient running a high fever or suffering from such disorders as stasis of blood, reinforce oneself investment confidence, investment deadline spins, in an attempt to reduces the probability of deficit, and decrease make not rational and decision-making opportunity.

Measure through be being answered in great quantities only, reliable investment concept, with the investment frame of systematization, investor ability him conquer is short of inherently, ability wins out in the long-distance running of investment.

? The article is come from period happy meeting