Banish the gambler
Modern economics is based on the assumption that we humans always act in our own best interest and in a purely rational way. But the “irrational exuberance” that led to the 2008 GFC demonstrated just how flawed we are as investors.
Behavioural economist Richard Thaler, winner of the 2017 Nobel Prize for economics, explored these flaws – lack of self-control, limited rationality and routine biases – which give rise to poor choices and embarrassing blunders and leave us baffled in hindsight.
Who can remember the dot.com frenzy, agricultural investment schemes, mass marketing of contracts for difference and forex trading or double gearing into index funds. While they are etched in the memories of those who lost money, they hardly rate a mention now.
Investment fads come and go but they all
