valueandprices
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Cheung’s market mood model

There are six phases of market mood in Cheung’s model: Normal— This is the base-building or consolidation phase where fundamentals are poor but stabilizing. Value investors are showing interest. Hypomania— Favorable news shocks hit the market, and prices break higher out of consolidation. Speculators, focused on short-term gains, begin buying. As the market continues higher, […]

valueandprices
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The Wisdom of Lord Keynes

Way back in 1925, John Maynard Keynes provided a wonderful insight on the role of speculation in shaping stock returns. Observing the predilection of investors to implicitly assume that the future will resemble the past, Keynes warned: “It is dangerous to apply to the future inductive arguments based on past experience unless we can distinguish […]

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The Golden Rule

  Wisdom acquisition is a moral duty Read, read, read. Read about the great successes and great failures. And apply what you read to a framework of mental models. Learn to think like Charlie Munger. Learn social psychology. If you want to become wise and wealthy, you can’t do without it.[Source: Munger; USC 2007] Wisdom acquisition […]

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Jason Zweig

Jason Zweig wrote In much of life, doing things right over and over again is a sign of skill; expert musicians, for instance, rarely hit a wrong note. And the skill of one professional musician doesn’t make it harder for the others to be equally expert. But in the financial markets, where so many investors are […]