Ken Fisher opens Bunk 7 by asking the question - Ever had a gut feeling? You just knew you should buy XYZ stock but did not — for whatever reason — then it skyrocketed 300 percent. Or you knew to sell ABC stock — but ignored your instinct — then it plummeted 80 percent. Ken Fisher reminds readers that you have these feelings all the time, and they are usually right — as you recall. But Ken Fisher explains that is also almost certainly your mind being your worst enemy and playing tricks on you.
There is a major school of behavioral psychology now, called behavioral finance, dedicated to understanding how our brains evolved — to deal with basic problems of human survival — and why that leads to serious investing errors. Whole books have been and will be written on the topic, and it was the basis for Ken Fisher’s third question in Ken Fisher’s 2006 book, The Only Three Questions That Count.
Ken Fisher notes that our brains produce some very basic bunk, making it difficult to deal with counterintuitive problems like publicly traded markets. And one major bit of bunk is the notion you should trust your gut.
Read further details behind BUNK 7: TRUST YOUR GUT in Ken Fisher’s Debunkery.