interesting advice In 2000, the fine-art market was caught in an embarrassing predicament.
When Christie’s and Sotheby’s released their spring catalogs that year both auction houses realized they were offering for sale the same Paul Gauguin painting, Vase de fleurs (Lilas):
A Gauguin original?
Source: Google Images
Experts were quickly called in to evaluate which was the genuine article and Christie’s painting turned out to be the copy. A counterfeit ring was eventually traced to an art gallery in New York City, arrests were made, prison sentences handed out and many other fakes confiscated.
I remember the Lilas incident quite clearly as I had just started to get my feet wet in the investment industry and it was a ‘crossover’ story that got plenty of attention in the financial media. I remember thinking at the time that Christie’s must have only looked at the evidence that confirmed what they wanted to hear, which was, naturally, that their Lilas painting was authentic. After all, a bit of further independent due diligence quickly revealed that it was a forgery.
I didn’t realize it at the time, but I was actually ruminating about one of the most common and destructive of investor cognitive biases: confirmation bias. In fact, Swiss author and researcher Rolf Dobelli in his bestseller “The Art of Thinking Clearly” called confirmation bias the “mother” of all biases. Confirmation bias occurs when we only seek out or give value to information that confirms a viewpoint or belief that we already hold. To our detriment, we filter out any information that casts doubt on our pre-established beliefs. If you don’t believe in the enormous power of confirmation bias, consider the inflexible views on vaccinations or mask wearing during the Covid crisis.
From an investment perspective, confirmation bias is dangerous because it can lead to overconfidence and therefore to portfolio overconcentration. If you’ve convinced yourself that the market can only go higher, for instance, why bother having defensive assets? Similarly, if you’ve sold yourself entirely on a particular sector, equity style or market capitalization strategy, why bother having exposure to anything but the securities that dovetail with your outlook?
So if one only believes pump and dump fake doc "math" is Bible, drink the koolaid communion...that can be expensive.
No regrets selling 10% of my EMO shares when it hit 10 bagger +...now it's up to the drill bit to see if there is a 5 bagger from here
I don't put as much "cognitive bias" into upside from AZN....it was a huge env diaster, locals remember (pumper shareholders don't)
Ditto zinc prices as smelter capacity is the issue not mine supply. Zinc mine supply isn't in short supply.
JMHO why EMO SP is heavily shorted....some know the "real world zinc" and some just drink the Koolaid with cognitive blinders on.
How has that worked out since last Oct?