A very interesting TedTalk showing the stupidity in human (well, I like using strong words) drives the decision in us all.
Are you dictated by your natural weaknesses and making bad choices?
Worse yet, are you manipulated by the environment into making choices you do not agree to?
I think the most important thing from this talk is to make sure your government save its income every time it gets its pay check.
Can you really make objective trading decisions when you have optimism bias?
There two things I like to highlight from this talk.
First, being more optimistic is important in achieving success. It gives you the motivation and persistency necessary to keep pushing forward. For some people, that drive comes from their passion in the things they do as explained by Sir Ken Robinson. Others need a reason to carry them forward, especially under adversities.
Second, opposite to the overall scheme of things, it is important to handle trading decisions dispassionately. Being too optimistic or too pessimistic will affect your ability to make proper trading decisions. Many traders can stay calm and objective for a short period of time but not for long. It is this ability to stay focus and free from emotional bias that often separate the good traders from the rest.
A great presentation on the predictability of bubble burst.
Watching just the video itself is not enough because Mr. Sornette also talked to Ted and provided his predictions and analysis on various global markets. You can read by following the link below.
Turbulent times ahead: Q&A with economist Didier Sornette
(For the eternal bulls of the US stock market – sorry, not a bearer of good news this time.)
One thing interesting is his measures on the risk level in May 2013 somehow match closely to the timing of my call in real-time chat for a potential sudden drop in S&P with significant size. In another words, his use of power law distribution analysis on market activities may work similarly to my custom breadth analysis.
It is very encouraging to see academic research finally producing something useful with predictive value.