Entries by Spencer Li

Confirmation Bias – I See Only What I Want to See!

Confirmation bias refers to a type of selective perception that emphasizes ideas that confirm our beliefs, while devaluing whatever contradicts our beliefs. This can be thought of as a form of selection bias in collecting evidence to support certain chosen beliefs. For example, you may believe that more red cars drive by your house during […]

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S&P 500 – Awakening Bear | Technical Analysis | Stock Indices

The selloff continues in the US markets, as the Dow and S&P 500 dropped for a fifth day, with the pullback coming on the cusp of earnings season. This slide marked the S&P 500’s worst day since December 8. The declines were the largest losses this year in terms of both points and percentage drops for […]

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S&P 500 – Bernanke’s Comments Provide Fuel for Stocks

Although there was weakness in the STI today at closing, the European and US markets have rallied strongly after comments from Bernanke. “U.S. stocks advanced, sending the Standard & Poor’s 500 Index to the highest level since May 2008, after Federal Reserve Chairman Ben S. Bernanke said accommodative monetary policy is still needed to spur […]

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Endowment Bias – Do You Really “Own” a Trading Position?

People who exhibit endowment bias value an asset more when they own it, as compared to when they don’t. This is inconsistent with standard economic theory, which asserts that a person’s willingness to pay for a good should always equal the person’s willingness to accept disposition of the good.     In essence, this bias […]

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Long-term refinancing operations (LTROs) – Long-term time bombs?

Long-term refinancing operations (LTROs) involve the central bank lending money at a very low interest rates to eurozone banks, which has led to the term “free money.” The injection of this cheap money means that banks can use it to buy higher-yielding assets and make profits, or to lend more money to businesses and consumers […]

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