Multi-Factor Design

Overcoming Irrational Investment Decisions

I’m working on producing a guide to overcoming irrational investment decisions, because not only do I personally need it but I haven’t found a helpful guide.

Q1 hedge fund letters, conference, scoops etc

Multi-Factor Design

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One of the main insights I can share with you now is this:

Nobody is exempt from the irresistible effect of emotions on the mind,  not even the wisest among us; and to some extent irrationality is a  function of the structure of our brains and is hard wired into our very  nature by the way we process emotions.

Being irrational is almost beyond our control.

Emotions evolved for a different reason than cognition. These two forms of relating to the world are not connected seamlessly in our brains.

The split between our emotions and our cognition is a source of constant internal friction, comprising of a second emotional self within  us that operates beyond our will.

We constantly feel emotions and they continually infect our thinking, making us veer towards  thoughts that please us and soothe our egos. It is impossible to not  have our inclinations and feelings somehow involved in what we think.

Rational people are aware of this and through introspection and effect  are able, to some extent, to subtract emotions from our thinking and  counteract their effect.

Please share and like if you found this insight helpful.

Yours in investing

Adam C. Parris

P.S. Check out the NEW Australian Value Investing 3-day program running in July, places are limited, and it is best to reserve your spot now.

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Article by Adam Parris, Searching For Value

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