Inflexion Point Zone

One of Stevenson’s former students Eric Sinoway wrote a book on the professor’s teaching titled “Howard’s Gift.”

In the book, a the two discuss a friend of the author’s named Michelle is scared about her future after her boss and mentor retired suddenly.

Stevenson says that situations like this one are called “inflection points” and should be taken advantage of.

Stevenson told Sinoway:

“In Michelle’s case, it’s coming at a moment in time when the structures are removed and the rules are suspended. A moment in which she can reflect inwardly about what she wants, and then act to redefine the situation in such a way as to help her accomplish it.”

We spend so much time following rules and being guided that we panic when those guard rails are removed. The easiest and safest course isn’t always the best one. An unexpected shock can help to remind us that there are other options.

That’s a lesson that extends beyond individual careers to businesses. One CEO, confronted with the worst financial crisis since the depression, went on a hiring spree and increased her marketing spending. By doing the opposite of everyone else, by moving when others were paralyzed, she was able to get talent that wouldn’t have considered her company before and significantly increase sales.

By focusing on novel opportunities — not on what can go wrong — you can make the unexpected work for, rather than against, you.

Head and Shoulders Pattern for Trades

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The head-and-shoulders bottom chart pattern – is generally regarded as a possible reversal of a stock’s current downtrend and into a new uptrend. And if there is one thing that nearly every market observer needs to find right now, it’s stocks on the verge of a possible reversal.

The head-and-shoulders pattern is a popular pattern with traders, but there are a few things key to understanding this picture. First, just what does a head-and-shoulders bottom look like?

A perfect example of the head-and-shoulders bottom has three sharp low points created by three consecutive reactions in the price. It is crucial that this pattern form following a major downtrend in the stock’s price.

The first point – the left “shoulder” – occurs as the price of the stock in a falling market hits a new low and then rises in a minor recovery. The second point – the “head” – occurs when prices fall from the high of the left shoulder to an even lower level and then start to rise again. The third point – the right “shoulder” – happens when prices fall again but do not touch the low of the head. Prices rise again after they have hit the low of the right shoulder. The lows of the shoulders are decidedly higher than that of the head and, in a classic formation, are often more-or-less equal to one another.

Professionally Speaking

Jotting down, the trade day as & when, benchmark trades, went on good with a negative bias.

hello everyone, nifty slipping by exhilarating indeed an eyewash snapping by.

nifty closing well below 8000 gives us a perspective which can be thoroughed to be one among the circular trades on sustainability of the economy. Nifty closes well above the tipping point of 7800, expecting a negative open for tomorrow as for directional trades.

Directional trades not self evident, momentum & volatality keeping that in mind we can foresee short trades the bearish movement setting up a bearish trend.

Keeping the fingers crossed for tomorrows trades, expected to be the markets for the bears.

Ms KiranRaj SP

https://in.linkedin.com/pub/kiran-raj/8a/96/998

(Proprietary Trader, Trainer)

M/S Adventure Terrain Ventures

Hindsight Bias – continued

Hindsight bias, also known as the knew-it-all-along effect or creeping determinism, is the inclination, after an event has occurred, to see the event as having been predictable, despite there having been little or no objective basis for predicting it.

Abstract

Traditional accounts of “hindsight bias” inadequately distinguish “primary” hindsight bias from both “secondary” and “tertiary” hindsight bias. A subject exhibits primary bias when she assigns a higher ex ante probability estimate to actual outcomes, secondary bias when she believes that she herself would have made the same estimate of the prior probability of an event before receiving outcome information as she made after receiving it, and tertiary bias when she believes that third parties lacking outcome information were unreasonable if they did not make the same prior probability judgments that subjects now possessing such information make.

In our experiments, we find that when people can readily calculate the actual ex ante probability of an outcome, they don’t reassess that probability when told what outcomes actually occurred. They reassess only in situations in which they are unable to assess prior probabilities or when given information that the outcome was not simply a result of sampling or chance but the result of an imperceptible feature of the initial situation. Observed primary bias may therefore often be rational.

Hindsight Bias – Behavioral Finance – Confirmation and Hindsight Bias

Confirmation Bias
It can be difficult to encounter something or someone without having a preconceived opinion. This first impression can be hard to shake because people also tend to selectively filter and pay more attention to information that supports their opinions, while ignoring or rationalizing the rest. This type of selective thinking is often referred to as the confirmation bias.

In investing, the confirmation bias suggests that an investor would be more likely to look for information that supports his or her original idea about an investment rather than seek out information that contradicts it. As a result, this bias can often result in faulty decision making because one-sided information tends to skew an investor’s frame of reference, leaving them with an incomplete picture of the situation.

Consider, for example, an investor that hears about a hot stock from an unverified source and is intrigued by the potential returns. That investor might choose to research the stock in order to “prove” its touted potential is real.

What ends up happening is that the investor finds all sorts of green flags about the investment (such as growing cash flow or a low debt/equity ratio), while glossing over financially disastrous red flags, such as loss of critical customers or dwindling markets.
Hindsight Bias
Another common perception bias is hindsight bias, which tends to occur in situations where a person believes (after the fact) that the onset of some past event was predictable and completely obvious, whereas in fact, the event could not have been reasonably predicted.

Many events seem obvious in hindsight. Psychologists attribute hindsight bias to our innate need to find order in the world by creating explanations that allow us to believe that events are predictable. While this sense of curiosity is useful in many cases (take science, for example), finding erroneous links between the cause and effect of an event may result in incorrect oversimplifications.

For example, many people now claim that signs of the technology bubble of the late 1990s and early 2000s (or any bubble from history, such as the Tulip bubble from the 1630s or the SouthSea bubble of 1711) were very obvious. This is a clear example of hindsight bias: If the formation of a bubble had been obvious at the time, it probably wouldn’t have escalated and eventually burst. (To learn more, read The Greatest Market Crashes.)

For investors and other participants in the financial world, the hindsight bias is a cause for one of the most potentially dangerous mindsets that an investor or trader can have: overconfidence. In this case, overconfidence refers to investors’ or traders’ unfounded belief that they possess superior stock-picking abilities.

Avoiding Confirmation Bias
Confirmation bias represents a tendency for us to focus on information that confirms some pre-existing thought. Part of the problem with confirmation bias is that being aware of it isn’t good enough to prevent you from doing it. One solution to overcoming this bias would be finding someone to act as a “dissenting voice of reason”. That way you’ll be confronted with a contrary viewpoint to examine.

source : http://www.investopedia.com

Price to Earning Ratio P/E Ratio

  1. A valuation ratio of a company’s current share price compared to its per-share earnings. For example, if a company is currently trading at $43 a share and earnings over the last 12 months were $1.95 per share, the P/E ratio for the stock would be 22.05 ($43/$1.95).

Demystified: How to use PE ratio to value a stock During bear markets, stocks generally trade at lower PE multiples and during bull markets at higher levels in relation to historical values.

The PE ratio is probably the most common measure to help investors compare how cheap or expensive a firm’s shares are, as stock prices, for lack of a better term, are arbitrary. The trailing PE is just the price per share of the stock divided by the annual net diluted earnings per share the firm generated in its last fiscal year. The forward PE is the price per share of the stock divided by next fiscal year’s annual net diluted earnings per share of the firm. It’s only when investors compare a firm’s share price to its annual net diluted earnings per share that they can get a sense for whether a company’s shares are expensive (overvalued, overpriced) or cheap (undervalued, underpriced). The higher the PE, the more expensive the company.

Capital Style

WE can take capital or the very word capital’s dichotomy can be understood as capping the little.

Capital = Working capital+ FIxed Capital or the industrial capital, this term industrial capital can be widely understood to be the market capitalisation or the market share ;specific or as a whole.

Capital Style when taken to be in different contexts as the base & lift off as the predicaments or presuppossitions rather than as assumptions or presumptions.

Presumptious ; when taken as the capital style , is more taken to be rather than processed as a system.

Capital style as taken to be decisive to approach the indecisiveness , indecisiveness being on the humane side or error presupposed directly categorizing it into the very section of Behavioural Finance than behavioural economics. Behavioural finance is the study of the influence of psychology on the behaviour of financial practitioners and the subsequent effect on markets. Behavioural finance is of interest because it helps explain why and how markets might be inefficient.

When we talk more on this capital Style this takes us to the behavioural skills which is the application. THE APPLICATION.

Behavioral skills are the skills you use to successfully interact with others.

Capital Style & portfolio management can be a theory of relativity study or an application as taken to be for the purpose of the very study.

Capital Style presumed to be the Runway, the establishment , the operative efficacy, nintendo hitherto.

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