2/ "When attention is drawn to the possibility of a change in any significant aspect of life, the perceived effect of this change on well-being is likely to be exaggerated.
"Paraplegics & lottery winners have many experiences that do not relate directly to their special status.
3/ "Once the situation in which they find themselves is no longer novel, people in these circumstances often (perhaps mostly) think of other things.
"College students were asked two questions: "How happy are you?" and "How many dates did you have last month?"
4/ "The correlation was .12 when the happiness question came first but rose to .66 when the order was reversed. Focusing attention on dating is apparently sufficient to induce the illusion that this aspect of life dominates one's well-being.
5/ "After correcting for demographic differences, there was no difference in self-reported overall life satisfaction between students in California and in the Midwest.
"This is remarkable, as satisfaction with several individual aspects had differences, all favoring California."
6/ "Self-reported overall life satisfaction was higher than what was predicted for a similar individual in another location.
"Although life satisfaction did not differ in the two regions, respondents in both regions predicted higher overall satisfaction for a Californian."
7/ "Respondents who imagined life in another region correctly anticipated many of the differences in satisfaction with individual aspects of life - especially climate, but they failed to appreciate that these those do not loom large in people's overall evaluations of their lives.
8/ "Easily observable aspects of life that distinguish the two regions are therefore assigned too much weight when people imagine life in a different place.
"In Table 1, the two regions differ most in satisfaction with aspects of life rated as relatively unimportant."
9/ "Thinking of the life satisfaction of someone in a different region apparently increased the perceived importance of these distinctive aspects (e.g. climate, cultural opportunities) without decreasing the perceived importance of other aspects of life."
10/ "When added to the model one at a time, four of the five climate-related aspects of life were successful as mediators (natural beauty was the exception), each separately rendering the region effect nonsignificant. Cultural opportunity was also an effective mediator."
11/ "It is difficult to simultaneously allocate appropriate weights to considerations that are at the focus of attention and to those currently in the background.
"The focusing illusion may also entail an exaggeration of the importance of ideas that are currently on the agenda.
12/ "A politician may leverage the focusing illusion by announcing small initiatives with great fanfare, encouraging the erroneous belief that these initiatives will make a substantial difference in people's lives.
"Nothing you focus on will make as much difference as you think.
13/ "A focusing illusion would lead people to exaggerate the adverse impact of climatic changes by underestimating the ability of future generations to adapt.
"People may exaggerate the future hedonic impact of such changes."
1/ Did I Miss the Value Turn? (Arnott, Kalesnik, Wu)
"Value stocks remain priced at very attractive valuations across most regional markets—discounts in the bottom half of the cheapest decile. We may wait decades for another opportunity of this scale."
2/ "Value posted the worst drawdown in its history over the years 2017–2020.
"Value’s pre-pandemic drawdown in developed markets was slightly shorter than in the U.S. but was even deeper at 19%. In emerging markets, value continued to work until late 2018."
3/ "From Jan 2007 to Sept 2020 in the U.S., relative valuation moved from the most expensive quartile to the cheapest percentile; this explains more than 100% of value’s underperformance.
"Net of this downward revaluation, value would have beat growth by a respectable margin."
"Even unlikely events must eventually come to pass. Therefore, anyone who accepts small risks of losing everything eventually _will_ lose everything. The compound return rate is acutely sensitive to fat tails."
2/ "Looked at another way, a coin toss is physics. An event is random only when no one cares to predict it.
"Thorp discovered that he was able to guess approximately where the roulette ball would land: The wheel was slightly tilted. This made the ball favor the downhill side."
3/ "Money management is the tricky & all-important issue of how to extract the greatest profit from a favorable opportunity. You can be the world’s greatest poker player, but if you can’t manage your money, you’ll end up broke. Sadly, almost everyone goes broke in the long run."
Money gives you freedom, which can then be allocated toward one or more goals:
* not have a job any more
* simplify your business / align it with your values
* help others
* accept negative expected returns (big house, nice car)
(The fourth one may be more stuffy than it seems!)
2/ "College admissions is not about you; it’s about the college. It’s not about being “worthy” per se; it’s more about fitting into a college’s agenda, whatever that might be.
In a given year, that might mean more full payers, humanities majors, and students from the Dakotas.
3/ "Sometimes the goals are narrower: a pitcher for the baseball team, a goalie for the soccer team, or an oboist for the orchestra. Many colleges give special consideration to applicants w/ deep, lasting connections to the school (e.g., children of alumni & employees)." (p. 9)
1/ Investor Demand for Leverage: Evidence from Equity Closed-End Funds (Dam, Davies, Moon)
"We document a strong negative relation between equity CEF fund leverage and associated discounts, indicating that investors pay a relative premium for leverage."
2/ "Each year, we segment funds into two categories: pure equity and mixed-allocation funds. These categories are primarily based on Bloomberg classifications. We manually classify the funds that Bloomberg does not cover. The vast majority of our funds are purely equity-focused."
3/ "To prevent survivorship bias, we do not require funds to have the data from Bloomberg.
"When we use a binary indicator for whether a fund is levered, we set it to zero for funds not covered by Bloomberg. This is conservative (biasing in the direction of finding no result)."
"In contrast to the widely held belief, mispricing associated with the 11 L/S anomalies underlying our composite ranking measure appears to be at least as prevalent in developed markets as in emerging markets."
2/ Caveats: "Emerging markets appear to be comparatively under-researched. This likely has led to a better understanding of which factors truly have predictive power in more mature markets, and the Stambaugh, Yu, and Yuan mispricing score could be partly based on such variables."
3/ "Ranks are standardized to be uniformly distributed over the interval (0,1] in each country-month. A stock's composite rank is computed as the arithmetic average of its anomaly ranks.
"I rely on yearly (not quarterly) accounting data due to limited data availability."