I was interviewed on Fox Business News by Liz Claman this past week and spoke about 8 Mistakes Money Managers Make. Here’s a recap of those 8 mistakes. The interview can be found here and the full article can be read on Alpha Theory’s website.
1. Confidence Bias- only search for information to support your thesis
2. Good Stock Paradox- as expected return decreases, firms up exposure
3. Value Trap- limited downside with no inherent upside
4. Risk/Reward- misconception that greater risk is required for higher returns
5. Dealing with Losers- must analyze losers through process, not results
6. ETF Hedge- improper use of ETFs as a hedge
7. Best Idea- must make your best idea your biggest position
8. Position Overload- better to have less positions with more positive returns
