Ghost Stories #9: Why Bias is Bad for You (with Kingsley Williams of Satrix)

In the markets, we are often our own worst enemies. Bias clouds our decision making, making it difficult to take a logical and unemotional approach to each investment or trading decision. An understanding of bias is the first step in winning the battle against our own minds, with application to decision-making that goes far beyond your investment portfolio!

Kingsley Williams, Chief Investment Officer of Satrix, joined me to talk about:

• An introduction to behavioural finance and cognitive bias, including some suggestions on further reading.
• Superiority bias: the belief that we are better than the average and how this impacts the choice of active funds over time based on performance vs. the benchmark.
• Anchoring bias: poor decision making as a result of anchoring to a particular number or outcome, making it difficult to accept an alternative.
• Confirmation bias: pre-existing beliefs that limit our ability to interpret new information, especially when it goes against what we believed to be true.
• Action bias: the fear of doing nothing, even when it’s the right thing to do.

At the intersection of psychology and finance, we find these fascinating topics. Whether you have been exposed to these topics before or not, this podcast is an excellent investment of your time.

Disclaimer
Satrix Investments (Pty) Ltd is an approved financial service provider in terms of the Financial Advisory and Intermediary Services Act, No 37 of 2002 (“FAIS”). Satrix Managers (RF) (Pty) Ltd (Satrix) is a registered and approved Manager in Collective Investment Schemes in Securities. The information above does not constitute financial advice in term of FAIS. Consult your financial advisor before making an investment decision. Past performance is not indicative of future performance.