Investing Lessons From Indianapolis Speedway

I probably shouldn’t say this, but what the heck: Much, if not most, behavioral finance research is boring. Long studies written in Academic-ese remove its psychological thrill. Take Prospect Theory or myopic loss aversion, which finds people hate losses more than they enjoy equivalent gains and take excess risk in hopes of avoiding loss. It is an easy trait to observe and feel, and its implications are deep, common and fascinating, but the research papers detailing it? Bit of a slog, sorry. Dozens of pages about random people playing games of chance, all in the passive voice, and they don’t give actionable takeaways. How can investors beat this mindset? Or channel it into something useful? Read Full Article »