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Top Reads: Risk Taking Behavior, Hindsight, Behavioral Finance and the 2017 Total Solar Eclipse

This week, Raghav has compiled a list of interesting personal finance articles, most of which are related to risk taking behavior in finance.

For more articles like this, check out Raghav’s two previous Top Reads articles here and here.

Personal Finance Articles

Take More Risk in Life and Less in Investing

A group of financial planners was asked one of George Kinder’s famous three questions: if you were told that you had just one day left to live, what dreams or life accomplishments would be left unfulfilled? While most participants answered that they would have engaged in more risk taking behavior in several aspects of their personal lives, or had more experiences outside of their comfort zones, they did not feel the same way about the risks taken with their financial portfolios. Read more here.

Everything, in Retrospect, is Obvious

When investing in stocks, it is important to understand how much risk we want to assume so that we are prepared if and when the market experiences a downturn. It can be easy to look back on major investment decisions and pinpoint exactly where we went wrong, however, hindsight is always 20/20.

“Hindsight tricks people into believing they would have avoided all the previous mistakes made by other investors. It also makes people forget some of the mistakes they have already made. It’s the everyone-else-is-an-idiot-but-I’m-completely-rational syndrome (aka the Dunning-Kruger effect).”

Find out why Ben Carlson, CFA finds the phrase “this will end badly” to be annoying in the investment world.

The Active Equity Renaissance: Behavioral Financial Markets

Modern Portfolio Theory is becoming obsolete as behavioral finance is gaining momentum. Research is showing that as emotional beings, humans are not good at making decisions – even when we have the facts laid out for us. Our emotions make us vulnerable when it comes to decisions and with this information, we have come to realize that looking at markets through a behavioral lens is much more promising. Read more about behavioral finance and the move away from MPT here.

Personal Interest Articles

Preparing for the August 2017 Solar Eclipse

On August 21, 2017 you will have a once in a lifetime opportunity. For the first time since 1918, Earth will witness a total solar eclipse. Scientists and NASA have been preparing themselves and the public for this long-awaited event as it will provide a unique scientific learning opportunity.

“During a total eclipse, we have the rare opportunity to look directly at the sun’s vast, striking outer atmosphere, the corona. The corona appears as pearly white rays and streamers, radiating around the lunar disk. The August 2017 eclipse will present this exciting opportunity to millions across the entire country.”

Find out what you need to know to safely witness the total solar eclipse and what implications it has for science here.

What CEOs are Reading in 2017

If you are looking for quality material to add to your summer reading list, take a look at what the leaders of some of the world’s largest organizations are reading right now. Sharing both fiction and nonfiction books, their choices may surprise you!

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