Episode summary · Based on the recording of the conversation
In brief
Kliment Robev and his co-host work through the seven most common psychological traps for investors – from the fear of taking a loss and overconfidence to the habit of selling winning positions too early and holding losing ones too long. Robev’s central argument is that people lose money not only because of a bad asset but because of a bad reaction, and that their own reactions are the only thing an investor controls and is responsible for.
Key points
- Robev explains that losing €100 hurts roughly twice as much as an equal gain pleases – a response rooted in evolution – and as a practical safeguard suggests that, whenever new information arrives, investors ask themselves whether they would buy the same position today; if the answer is “no”, the position should be reconsidered.
- Both argue that every trade needs a written plan – why it is being bought, what to do if it rises or falls by 20% and when to sell – with his co-host stressing that it should be drawn up before entering the position, while emotion is absent; losing sleep over a position is named as the clearest sign that it is too large.
- On overconfidence, Robev notes that around 80% of people believe they drive better than average; his co-host recalls how his first trade in 2009 – a short position on the S&P 500 – brought a quick profit, after which he multiplied his stake and was stopped out on margin, while Robev admits to similar mistakes with short positions around 2000–2001 and an overly pessimistic view at the end of 2022.
- Against confirmation bias, amplified by social media algorithms, Robev believes one should deliberately seek out the opposing view; he cites COT data showing hedge funds heavily short equities and bonds while pension funds and insurers are historically very long, and stresses that if nothing could change our mind, it is belief rather than analysis.
- On herd behaviour, his co-host tells of an acquaintance who bought gold shortly before a 20% fall, while Robev sees it as a sign of overheating when a topic reaches non-specialist media; against overweighting recent events, he points out that US equities have returned around 10% a year on average but almost never exactly that in any single year, and suggests looking at a ten-year chart.
- On anchoring and the final trap – selling winners early and holding on to losers – Robev warns against averaging down without fresh analysis, and as an overall framework his co-host proposes writing down, before each trade, what, why, when, how much and how we will buy and sell.
Context
Episode 2 of season two of the podcast “Пари и посоки” (Money and Directions). The starting point is that, in the hosts’ view, emotions affect novice and experienced investors alike; the conversation also touches on the market’s muted reaction to conflicting news around Donald Trump and on hedge fund positioning.
Views reflect his position at the date of publication and are not investment advice. Regulatory information
