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Cognitive psychologists have conclusively demonstrated that the mind does NOT work just the way you think. In fact, human cognition has many irrational components, even when we are trying to make rational decisions. There is a developing field of "behavioral finance" which attempts to describe human decision making under uncertainty, where the decisions have financial or economic implications. Dave DeMers will tie together some current understanding of cognitive processes and research in behavioral finance, pointing out: (i) why certain bad choices tend to be inevitable, (ii) why the investment field is particularly sensitive, and (iii) how attention to the risks of cognitive illusions can help bring discipline to one's investment process, be one a day-trader, investor, or manager of a $1billion portfolio. There will be a quiz.
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David DeMers is currently Portfolio Manager with Prediction Company in Santa Fe, NM. Prediction Company, founded in 1991, has developed and continues to develop highly computerized statistical trading strategies now being used by the proprietary desk of Warburg Dillon Read. David received a PhD in Computer Science from the University of California, San Diego and holds an MBA in finance and a JD, both from UCLA.
