The Online Investing AI Blog

Pic @ Flickr Creative Commons

I’m in with the in crowd, I go where the in crowd goes

–Dobie Gray

We all want to be part of Dobie Gray’s in crowd, don’t we?

It’s a good feeling to be accepted and popular. Being popular improves our self-esteem and sense of value. We also feel we’re right in the decisions we make when the crowd agrees with us.

Does that extend to the stock market? According to a study published last week in the journal Current Biology, the answer is “you betcha.”

Read more…

Investing, Money, Online Investing AI, Success, US Economy emotions, finance, fundamental, indicators, psychology, science of trading, sentiment, stock market, technical

lrargerich@Flcikr

Terrance Watanabe had it all.

He owned THE most successful import-export business in America. He had the big house and the nice cars.

He sold his business in 2000 for an enormous sum of money–experts expect it was in the hundreds of millions–and possibly the billions of–dollars.

Bucking the common stereotype of the rich CEO, Terrance never became a snob. He started a philanthropy and was known as a big tipper.

Yep. Terrance had it all. Including a huge gambling problem. The Wall Street Journal reports he lost nearly $127 million in a now legendary alcohol-fueled gambling binge. Before we get all high and mighty judging Terrance’s idiocy, we should take a step back and wonder what lessons we can learn from Terrance’s fall.

Read more…

Investing, Money, Online Investing AI, Success casino, debt, emotions, gambling, Money, odds, problem, trading, Wall Street Journal

The market is run by emotions. It’s also ruined by them.

Despite what the financial world wants to think–and especially wants us to think–most financial decisions, from the casual investor to the commodities trader at Goldman Sachs, are emotional trades. It’s a gut feeling, or instinct, that prompts the trades.

And, in a way, that’s OK. After all, if most people invest with emotions, that should put you right in the pack of the trading action. It’s when investors become blinded by their emotions that things go awry. They fall behind the pack. They bet too much. They sit on the sidelines too long. They hold when they should fold, and fold when they should hold.

To avoid this, you need to know which emotions are most likely to mislead your investment actions Here are the seven most deadly emotions for investors.

Read more…

Accelerating Technology, Automated Trading, Business Strategy, Internet, Investing, Money, Online Investing AI, US Economy emotional, emotions, fear, greed, jealousy, market, paranoia, pride, worry

As Automated Trading become more and more popular, it’s interesting to hear people’s ideas and opinions on the matter. Some people think that they have to be perfect in order to be useful. Or, they think that they have to make money on every trade to create value for it’s owner. Or, the Automated Trading systems must correctly determine the direction of the market on a consistent basis.

That kind of thinking is silly when you take a moment to consider it. What trader makes money on every trade? Is it possible to have more losing trades than winning trades and still make money? Absolutely. If your winning trades make more money on an average per trade basis, then it is possible to have more losing trades and still make a profit.

Read more…

Automated Trading, Investing, Money Automated Trading, emotions, human trading, Investing, investors, Money, stocks

Brain's neurons at work.

People change when they’re in love. They talk different. They act different. They even walk different.

Scientists say love can change your brain.

And so can money.

Jason Zweig’s book, Your Money And Your Brain, which I mentioned yesterday, offers lessons in neuroeconomics, a cross between neuroscience, economics, and psychology.

This science is a quest to find how your brain reacts to financial situations.

It might also help you get rich.
Read more…

Accelerating Technology, Automated Trading, Great Books, Investing, Online Investing AI Automated Trading, brain, emotions, Jason Zweig, neuroeconomics

Since most people have never even heard of an Automated Trading system, I thought it would be a good idea to take a moment and explain some of the benefits.

An Automated Trading system is a computer program that buys and sells stocks, options, futures or currencies based on specific rules. These systems are also known as algorithmic trading systems. Since they use a specific set of rules (the algorithm), they have some benefits over human traders.

Read more…

Accelerating Technology, Investing, Money Automated Trading, benefits, computers, emotions, fear, greed, Investing, markets, Money

One lie that the financial industry and its legions of wizards rely on is that only a professional trader can time the market. Of course, that should read: Only a person employed by a financial house can time the market.

In fact, when an ordinary person tries to time the market, these wizards label such behavior as “risky” and “dangerous.” When they do it, it’s called, “shrewd” and “audacious.”

I don’t need to offer proof that this is untrue. Look at the current market and the long line of fallen one-time industry wizards. That’s proof enough.

The truth is it’s difficult to time the market… and yet, incredibly easy. How can that be? Humans are emotional creatures with all the good and bad that comes with it. A hardcore, disciplined investor who sits on Wall Street, or is shouting in the pits at the stock exchange, suffers the same pangs of greed and fear–just like you. Maybe they’ve been able to deal with the emotions better than an untrained investor, but they discount their own frailties at their own peril. Maybe that’s what happened. People who don’t think they’re being greedy, may be the greediest of them all. People who don’t believe they are afraid, are, perhaps, the most fearful.

So, when the financial wizards tell you that you can’t time the market, they may be right. But, they are incapable of such money mastery, too.

Read more…

Accelerating Technology, Investing, Money, Online Investing AI AI, commodities, emotions, forex, market timing, stocks

When you were a kid and you saw the pretty flame with its rainbow of blues and yellows and oranges flickering from the kitchen stove, did you ever reach out and try to touch it?

Yow!

That was a quick and painful lesson, wasn’t it?

Maybe your mother or father told you not to touch a hot stove again, like you even needed reminding.

But, your parents could have just as easily said: “Never turn on a stove!!! Avoid fire!!! Run into the darkness to escape the pain of possible heat!!! Eat only raw meat and uncooked vegetables!!!”

(If your parents did give you this type of advice, they might have been members of the fear-mongering media, who seem bent on teaching people the wrong lessons about finance and investing.)

When you made mistakes–whether it was failing a Geometry test (several times in my case) or falling off your bike–you hopefully got back on the bike, or back into class, and tried again. Those lessons improved your potential or opened up better opportunities. You didn’t abandon all hope of ever using two-wheeled transport again, or decried people who were good at Geometry as evil villains (OK, maybe I did that a little).

This is how you should approach investing. A vicious downturn in the economy shouldn’t teach you never to spend again… or not to buy a house… or not to invest again. What you should learn is how to spend properly, how to buy the right house, and how to invest intelligently.

Business Strategy, Great Books, Investing, Online Investing AI, US Economy economy, emotions, fear, finances, Investing, lessons, trading

As technology increases, most futurists expect minds to be upgraded by machines. However, according to author Rick Notter, of Better Sound Advice, machines are benefiting the brain right now… through music.

Music, according to Notter, can relax, rejuvenate and re-wire your current thinking machine. In fact, according to Notter, music can help you cure your insomnia, lose weight, improve your attitude, and change your life.

This isn’t necessarily a new idea–from war drums to love songs–music was meant to create emotions and emotions can create real physiological changes. Look at your friend’s face when his or her favorite song plays. Think about how you’re transported back in time when you hear a song from “back in the day.” And watch people dance

Music is also part ofa new generation of Mind Spas, something that is very much associated with Singularity mind-machine integration. Here, one doctor explains how these mind spas are revitalizing an aging population.

Dr. David Loewenstein, a University of Miami brain disorders researcher, said there’s much interest in any therapies that could help keep aging brains quick. With 78 million baby boomers beginning to hit their 60s, “there’s a big market for these sort of things.”

There are apparently a lot of ways to get to the Singularity.

Accelerating Technology, Dreams Come True, Online Investing AI, Success, US Economy Add new tag, emotions, interface, machines, mind, music, self-improvement