The Nature of Risk
Let's do a deep dive into Justin Mamis' sentiment cycle.
Tversky and Kahneman's prospect theory. Thaler's behavioral economics. Shiller's inefficient market, and so much more. All of it goes to show that the homo economicus found in academia is only human, far from rational. What we have here are not people with investment problems; we have investments with people problems.
What are these problems and their causes, and why can traders and investors that are aware of the symptoms outperform their peers? We've already reviewed Weinstein's stages. Let's do a deep dive into Justin Mamis' sentiment cycle.
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