FP Answers: How do I recognize investment bias in myself and my adviser? - Financial Post | Canada News Media
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FP Answers: How do I recognize investment bias in myself and my adviser? – Financial Post

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2 years ago

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By Julie Cazzin and John DeGoey

Q: We all like to think we’re truly objective in the choices we make, but I know we all have biases. I’m just having a tough time pinpointing exactly what they are. What can I do to recognize them in myself so that I can become a better investor? — Angela

FP Answers: You’re absolutely right, Angela, we all have biases. The fact that you want to identify them and rectify your behaviour is a positive sign that you’re less biased than others. Many biased people deny they are biased at all.

The primary tools to combat the problem are humility and a willingness to engage in self-aware reflection about the decisions you make. You’ll need to move from passive reflection to making active behavioural change. Consider the following:

• Seek out alternative views from credible sources.

• Write things down. Specifically, try to memorialize your thinking so that you can test your analytical skills when things become clearer.

• Move from thinking fast (knee jerk) to thinking slow (purposeful contemplation of alternatives).

• Consider what might go wrong, including the worst possible outcome.

• Learn the difference between following a narrative and analyzing facts. Be less emotional.


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The world has come to be dominated by motivated reasoning, where people believe what they want to believe simply because it feels good and allows them to fit in with their friends and colleagues. Sometimes, trying to be rational involves being unpopular and coping with peer pressure.

Without knowing you personally, my experience is that the biggest bugaboo for investors is often overconfidence. I’m not suggesting you should be pessimistic or cynical, but many people would be better off if they lowered their return expectations by some amount to be more realistic.

The FP Canada Guidelines for financial planning suggest a 60/40 asset-to-income portfolio might generate a long-term return of between four and five per cent before product costs and advisory fees. Most people I meet are counting on more than that even though they insist they are being “reasonable” in their expectations.

John DeGoey is a senior investment adviser and portfolio manager at Wellington-Altus Private Wealth (WAPW), a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. 

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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2 days ago

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October 16, 2024

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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1 week ago

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October 11, 2024

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

S&P/TSX composite little changed in late-morning trading, U.S. stock markets down

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1 week ago

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October 10, 2024

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TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.

The S&P/TSX composite index was up 0.05 of a point at 24,224.95.

In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.

The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.

The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.

The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.

This report by The Canadian Press was first published Oct. 10, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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