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September 17, 2007 – Comments (7)

Hot-headed investors make better decisions: study

"Contrary to the popular belief that the cooler head prevails, people with hot heads -- those who experienced their feelings with greater intensity during decision-making -- achieved higher decision-making performance," they wrote.

The study monitored 101 stock investors in a simulated trading exercise spanning four weeks.

Get back to me when they're betting their own money, and they've got 4 years worth of data.

7 Comments – Post Your Own

#1) On September 17, 2007 at 10:44 AM, TMFHelical (99.05) wrote:

Does that mean that stock newsletters that CAPITALIZE, repeatedly underline, and use lots of exclamation points make better recommendations as well?

 Just wondering? : )

Zz

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#2) On September 17, 2007 at 11:03 AM, BroadwayDan (98.27) wrote:

hahahahahahah YOU JERKOS!  WE HOOOTHEADS ARE NUMBER ONE!  WE'RE NUMBA 1!  WE'RE NUMBA ONE! 

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#3) On September 17, 2007 at 11:37 AM, southseacapital (98.71) wrote:

I saw this on Yahoo Finance as well. I ran through at least 10 things wrong with this "study" in my head as well. In all of my experience calm, and disciplined investing is the ONLY way to beat the market.

Also a hothead is likely to go on hot streaks and then "blowup", losing a majority of their money in a short period of time.

Warren Buffet discredits this study. I'm suprised Yahoo even reported on it.

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#4) On September 17, 2007 at 4:53 PM, TMFBent (99.81) wrote:

"Does that mean that stock newsletters that CAPITALIZE, repeatedly underline, and use lots of exclamation points make better recommendations as well?

 Just wondering? : )"

I believe capitalization, repeated underling, and exclamation points are reserved for marketing materials, no? Along with promises of enormous returns? And maybe, just maybe, a ridiculous assumption made to seem normal or even wise via 20/20 hindsight, such as praise for a couple putting their entire life savings into BRK in 1957? (I see that one here now.)

Alas, you're swatting the wrong blog for that kind of thing. I'm the one who has repeatedly criticized the misleading Hidden Gems that is sitting to the right of the blog as I look for the original post. And this blog takes heat for doing so.

Sj

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#5) On September 17, 2007 at 7:45 PM, retailsails (95.69) wrote:

Ironically, there is an ad to the right of this blog that says I could have made $300 million if I were an early investor (50 years ago) in Berkshire Hathaway...damn I should have invested...

Instead, why not just highlight one of the many picks from the FOOL newsletters which have provided outsized returns over the last few years?

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#6) On September 17, 2007 at 10:02 PM, TMFBent (99.81) wrote:

As I've mentioned, I don't write the ads. No one would like them if I did. They'd say stuff about thinking critically, and hard work, and not getting too excited, and other kinds of things that don't generally sell products to the hopeful.

What frosts my begonias is that such ads are misleading in terms of survivorship bias and other backward-looking thinking. "Of course! If only I'd invested my life savings in a tiny, billboard-traded retailer that was competing against huge, successful companies, but turned out to become the biggest of them all! That would have been so smart!"

That, to me, is not a whole lot different than saying, "If only I'd put my life savings on 00 on the wheel! I'd have made 35 times my money! And if only I'd done it three or four times in a row! All I'd have had to do is find the wheel and the time when that number hit 4 times in a row!"

A lot of luck looks, in hindsight by those who don't think things through, like skill or smarts.

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#7) On September 18, 2007 at 1:14 PM, TMFHelical (99.05) wrote:

"Alas, you're swatting the wrong blog for that kind of thing."

 Not swatting - just going for humor.  I agree with your sentiment.

Zz

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