{"id":1880921,"date":"2013-12-16T10:36:55","date_gmt":"2013-12-16T05:06:55","guid":{"rendered":"http:\/\/stockviz.biz\/index.php\/?p=1880921"},"modified":"2013-12-16T10:45:10","modified_gmt":"2013-12-16T05:15:10","slug":"biggest-challenge-is-convincing-people-not-to-trust-their-judgment","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2013\/12\/16\/biggest-challenge-is-convincing-people-not-to-trust-their-judgment\/","title":{"rendered":"Biggest Challenge is Convincing People NOT to Trust Their Judgment"},"content":{"rendered":"<div class=\"well well-small\">As the amount of data goes up, the importance of human judgment should go down&#8230; We should turn many of our decisions, predictions, diagnoses, and judgments\u2014both the trivial and the consequential\u2014over to the algorithms. There&#8217;s just no controversy any more about whether doing so will give us better results.<\/p>\n<p class=\"text-right\">&#8211;<a href=\"http:\/\/blogs.hbr.org\/2013\/12\/big-datas-biggest-challenge-convincing-people-not-to-trust-their-judgment\/\" target=\"_blank\">HBR<\/a><\/p>\n<\/div>\n<p>We have been discussing <a title=\"The Little Book of Behavioral Investing\" href=\"http:\/\/svz.bz\/tlbbinvesting\" target=\"_blank\">Behavioral Investing<\/a> on our blog for a while now and whats fascinating is that study-after-study shows that humans are the worst decision makers out there. We have the <a title=\"herd behavior of investors\" href=\"http:\/\/stockviz.biz\/index.php\/2013\/12\/07\/the-little-book-of-behavioral-investing-inside-the-mind-of-a-lemming\/\" target=\"_blank\">mind of a Lemming<\/a>, <a title=\"adhd investing\" href=\"http:\/\/stockviz.biz\/index.php\/2013\/11\/30\/the-little-book-of-behavioral-investing-adhd-investing\/\" target=\"_blank\">we over trade<\/a>, and we <a href=\"http:\/\/stockviz.biz\/index.php\/2013\/11\/09\/the-little-book-of-behavioral-investing-the-siren-song-of-stories\/\" target=\"_blank\">fall for stories<\/a>.<\/p>\n<p>Entrepreneurs are often advised to write their business plan on pen and paper. They may not have a profitable plan, but the very act of writing something down clarifies thoughts. To act clearly and rationally, it seems, we need to write a program. The very act of programming an investment strategy leads to a deeper thinking and clarifies risk, uncertainty and reward.<\/p>\n<p>In fact, 2 out of the top 5 performing Investment Themes have been quantitative portfolios.<\/p>\n<p style=\"text-align: center\"><a href=\"http:\/\/stockviz.biz\/index.php\/2013\/12\/15\/strategy-performance-roundup\/\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1880941 aligncenter\" alt=\"3 month performance\" src=\"http:\/\/portalvhds29z8xdrqhczq.blob.core.windows.net\/wordpress\/2013\/12\/3-month-performance.png\" width=\"309\" height=\"559\" \/><\/a><\/p>\n<div class=\"well well-small\">Models beat experts. Models represent a ceiling, not a floor. Humans with a model improve performance, but underperform the model. Humans without a model are ineffective. Following a model, but then trying to add value via intuition, actually destroys the model&#8217;s benefit and causes investors to under-perform the market. Experts need to design the models, but COMPUTERS NEED TO IMPLEMENT THE MODEL.<\/p>\n<p class=\"text-right\">&#8211;<a href=\"http:\/\/turnkeyanalyst.com\/2013\/09\/27\/the-case-for-systematic-decision-making\/\" target=\"_blank\">Turnkey<\/a><\/p>\n<\/div>\n<p>Investors should focus on writing a better model and developing the courage to allow it to do its job. If it fails on pre-defined statistical measures, debug the model and try again.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As the amount of data goes up, the importance of human judgment should go down&#8230; We should turn many of our decisions, predictions, diagnoses, and judgments\u2014both the trivial and the consequential\u2014over to the algorithms. There&#8217;s just no controversy any more about whether doing so will give us better results. &#8211;HBR We have been discussing Behavioral &hellip; <\/p>\n","protected":false},"author":2,"featured_media":1880991,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-1880921","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-your-money","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/1880921","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/comments?post=1880921"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/1880921\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media\/1880991"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=1880921"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=1880921"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=1880921"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}