Your Intuition Is Wrong, Unless These 3 Conditions Are Met

Emily Zulz
www.thinkadvisor.com
Originally posted November 16, 2018

Here is an excerpt:

“Intuitions of master chess players when they look at the board [and make a move], they’re accurate,” he said. “Everybody who’s been married could guess their wife’s or their husband’s mood by one word on the telephone. That’s an intuition and it’s generally very good, and very accurate.”

According to Kahneman, who’s studied when one can trust intuition and when one cannot, there are three conditions that need to be met in order to trust one’s intuition.

The first is that there has to be some regularity in the world that someone can pick up and learn.

“So, chess players certainly have it. Married people certainly have it,” Kahnemen explained.

However, he added, people who pick stocks in the stock market do not have it.

“Because, the stock market is not sufficiently regular to support developing that kind of expert intuition,” he explained.

The second condition for accurate intuition is “a lot of practice,” according to Kahneman.

And the third condition is immediate feedback. Kahneman said that “you have to know almost immediately whether you got it right or got it wrong.”

The info is here.

Morality is the new profit – banks must learn or die

Zoe Williams
The Guardian
Originally posted September 10, 2018

Here is an excerpt:

Ten years ago, “ethical” investing meant not buying shares in arms and alcohol, as if morality were so unfamiliar to financial decision-making that you had to go back to the 19th century and borrow it from the Quakers. The growth of banks with a moral mission – like Triodos (“quality of life, human dignity, sustainability”) – or investments with a social purpose – like Abundance, which finances renewable energy – has been impressive on its own terms, but remained niche, for baby boomers with a conscience. The idea that all market activity should have a purpose other than profit is roughly where it always was on the spectrum, somewhere between Marx and Jesus – one for the rioters, the subversives, the people with beards, unsuited to mainstream discourse.

But there is nothing more pragmatic and less idealistic than to insist on the social purpose of the market; banking cannot survive without it – not as a corporate bolt-on but as its driving and decisive motivation. The derivatives trade cannot weather the consequences of infinite self-interest, because there really will be consequences – extreme global ones. The planet cannot survive an endless cost-benefit analysis in which nature is pitted against profit. Nature will always lose and so will humanity as a result. Whatever the immediate cause of the next crash, if and when it comes its roots will be environmental. The Financial Times talks about “the insidious danger that pension funds deflate, leaving a generation without enough money to retire”. The most likely cause for that devaluation of pensions – leaving aside the generation that cannot afford to save for the future – will be stranded assets, pension funds having invested in fossil fuels that cannot be excavated.

The info is here.

Why It’s So Hard to Be an ‘Ethical’ Investor

Jon Sindreu and Sarah Kent
The Wall Street Journal
Originally posted September 1, 2018

In life, ethics are in the eye of the beholder. In investing, ethics are up to the whims of your fund manager.

With little regulation governing what a fund manager can call a “socially responsible” or “ethical” investment, a myriad of bespoke standards have popped up. Increasingly, these fund strategies are designed to beat the market rather than uphold morality.

This has created a dizzying of array possibilities when it comes to what these funds might hold. Fund companies can craft their definitions in such a way that they can simply rename existing products with an ethical allusion, without having to change their fund holdings.

Fund managers have rebranded at least two dozen existing mutual funds over the past few years, adding terms such as “sustainable,” and “ESG”—which stands for environmental, social and corporate governance, an industry buzzword.

The info is here.