Hao Xuguang: Why are w88 casino reluctant to change investment habits that have proven to be less effective
(Source: "Shanghai Securities News" 2016-08-08)
There are a series of reasons why people deviate from maintaining the status quo, such as pursuing a sense of control to prove that they are right, avoiding risks and"Loss aversion", seeking safety and insurance, avoiding regrets, trusting one's own experience, habitual thinking, the desire to change the status quo is often denied by others, etc.
Why are w88 casino often reluctant to change investment habits that prove to be less effective? For example, only focus on low-performing stocks; despite huge losses, you still cannot adjust the direction in time, and you often have to rebound on the way down? Psychologically speaking, the important reason is that they are often swayed by status quo bias.
SamuelsonandZeckhauserat1988The status quo bias was first proposed in 11267_11282|Status Quo Bias) concept. This is a concept closely related to the endowment effect, which refers to people's unwillingness to change the status quo. Policymakers have a strong preference for solutions that maintain the status quo.
Some scholars use questionnaires to examine subjects. Suppose you have 2,000 yuan in your account, and then answer the question: Are you willing to accept a 50/50 chance of losing 300 yuan, or gaining 500 yuan? Then answer: Would you rather keep the $2,000 in your account, or accept a 50/50 chance of having $1,700 or $2,500 in your account? The first question meets the requirements of testing the bias of maintaining the status quo. If the status quo is changed, the profit number is greater than the loss number. Accepting this opportunity is obviously better than not accepting it. The second question just changed the way it was stated.
The results show: For the first question, 37% of supervisors and 32% of general managers are willing to accept it; 63% of supervisors and 68% of managers are unwilling to accept it, that is, more than 60% want to maintain the original property status. Regarding the second question, 29% of supervisors and 27% of managers said they were unwilling to take risks, but 61% of supervisors and 63% of managers chose to accept a 50/50 opportunity. It can be seen that although the way the problem is formulated can have a certain impact on the decision-making of supervisors and managers, it is still difficult to change the impact of status quo bias.
Some scholars have also asked this question: Suppose you bought a bottle of good wine for $10 five years ago, and now it has appreciated to $200. You have three options: sell it for $200, buy another bottle for $200, and drink it slowly. According to the test results, most people choose to drink slowly. This shows a typical status quo bias.
Jack KnetschI did an experiment. He asked students in two classes to fill out questionnaires and gave each person a gift. The gift was placed in front of the subjects during the experiment. In one class it was an expensive pen and in the other class it was chocolate. At the end of the experiment, the experimenter took out another gift and told the subjects that they could exchange the gift in their hands for this gift. As a result, only about 10% of the subjects chose to exchange gifts.
Both New Jersey and Pennsylvania in the United States provide car owners with two types of car insurance that they can freely choose: one with low premiums but the car owner’s power to sue the insurance company is limited; the other with high premiums but the car owner’s power to sue the insurance company is unrestricted. The ex officio insurance option (i.e., the status quo option) provided to car owners by the New Jersey authorities is the first type, and the insurance provided by the Pennsylvania authorities is the second type. New Jersey's policy was implemented in 1988, resulting in 83% of car owners choosing the state-provided course insurance.
John Hershey et al. used the automobile insurance policies of these two states to study the status quo bias in 1990. They asked two different groups of respondents to choose between New Jersey and Pennsylvania policies. Among those surveyed who chose New Jersey's policy as their natural choice, 23% switched to the second insurance; among those surveyed who chose Pennsylvania's policy as their natural choice, 47% changed their natural choice to the second insurance.
Psychologists also conducted an experiment: when convening a meeting, people were first allowed to freely choose their seats, and then they went outside to rest for a while before entering indoors. This was done 5 or 6 times. As a result, most people chose the seats they sat in for the first time. This “positioning effect” is a classic example of status quo bias.
There are a series of reasons for people's deviant behavior in maintaining the status quo, such as pursuing a sense of control to prove that they are right, avoiding risks and "loss aversion", seeking safety and insurance, avoiding regrets, trusting their own experience, habitual thinking, and the desire to change the status quo is often denied by others, etc.
In stock investment, w88 casino have a strong preference to maintain their own operating habits. For example, if you can't bear the short position and operate repeatedly. When the market reaches a high point and starts to fall, some people blindly believe that "it's hard to buy a bull's money back" without considering the nature of the market, and they think they are rushing to rebound. Of course, different w88 casino have different operating habits. New w88 casino like to chase highs and often hang on to the top of the mountain; old w88 casino like to buy lows, often halfway up the mountain; experts like to increase leverage, and often end up being liquidated.
w88 casino have a strong preference for familiar investment targets. No matter what the market situation is, I always like to stick to buying stocks that I am familiar with but have been marginalized. For example, after the National Day holiday in 2010, as the Federal Reserve's quantitative easing policy triggered an increase in international commodity prices, coal and nonferrous metals became hot spots, and some w88 casino made huge profits during this period. However, coal prices began to fall in 2012 and have fallen for four consecutive years. However, these w88 casino are still keen on mining coal stocks, resulting in serious losses. In the small bull market of 2014 and 2015, the “Belt and Road Initiative”, high-speed rail, and nuclear power became mainstream hot topics, and many people seized on the market hot spots and made profits. However, after 2015, these hot spots receded, and some w88 casino continued to bet on these industries and have been deeply stuck to this day.
Psychological research tells us that we should never regard the status quo as the only option, and do not exaggerate the effort or cost of giving up the status quo. If there are multiple options that are better than the status quo, don't default to the status quo just because it's difficult to pick the best option. Force yourself to make a choice. In the stock market, it is right to stick to industries and stocks that you are familiar with, but you must keep up with mainstream hot spots and exit hot spots that have ebbed in a timely manner. In the process of stock investment, you must dare to admit your mistakes. If you buy wrong, sell decisively; if you sell wrong, boldly recover.
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