The hottest Behavioral Finance Substack posts right now

And their main takeaways
Category
Top Finance Topics

Walking In Memphis

Behavioral Value Investor • 148 implied HN points • 31 Dec 24
💰 Finance Behavioral Finance
  1. When people are in pain or facing difficulties, it's easy to think that things will never get better. It's important to remember that these tough times are usually temporary.
  2. Using past pains can help us grow and improve, especially in things like investing. Instead of giving up, we should learn from our experiences and stick to our tried-and-true methods.
  3. The future is often different from what we've recently experienced. Just like healing in life, financial markets also recover over time, so we should stay hopeful even when things seem bleak.

If people talk about a bubble, it’s unlikely to crash soon

Klement on Investing • 3 implied HN points • 20 Jan 26
💰 Finance Behavioral Finance
  1. It’s very hard to identify a stock bubble in real time, so you usually can’t be sure a bubble exists until after the fact.
  2. Media coverage and investor worries aren’t a reliable signal of imminent crashes; the press often misses bubbles or only calls them out after prices have already fallen.
  3. Even when a bubble exists, stocks can linger near their peak for months or even more than a year before a big drop, so crashes can be delayed and unpredictable.

It's 2026 and life is still messy

Klement on Investing • 4 implied HN points • 02 Jan 26
💰 Finance Behavioral Finance
  1. Prefer experimental and empirical evidence over abstract economic theory, because investing should be based on how the world actually behaves.
  2. Markets and economies are messy, complex social systems with many second‑ and third‑round effects, so simple “ceteris paribus” models and daily market noise often mislead.
  3. Use a clear rhythm for thinking: focus on ESG, deep economic and finance topics midweek, and lighter, quirky economic takes on Fridays, while staying curious and ready to challenge assumptions.

Hsieh, Moretti, Shiller, and the Rest: Part 2

Erdmann Housing Tracker • 252 implied HN points • 02 Jan 24
💰 Finance Behavioral Finance
  1. High housing costs are mainly due to long term rise in rent inflation and decline in housing consumption.
  2. The bubble story contradicts the evidence of high housing costs being a result of economic rents, not productivity.
  3. Robert Shiller's analysis overlooks the importance of considering rent inflation in understanding housing market inefficiencies.

This Next Market Crash Will Break Our Fragile Brains

QTR’s Fringe Finance • 67 implied HN points • 23 Feb 25
💰 Finance Behavioral Finance
  1. The next market crash may have serious psychological effects on investors. Many people today haven't experienced a long-lasting downturn, which could be shocking for them.
  2. Current stock prices are very high compared to earnings, which might lead to a big correction. People are buying stocks without truly understanding their worth.
  3. The economy is facing challenges that could lead to stagflation. If that happens, it might hurt everyday people more than the wealthy, widening financial inequalities.
Get a weekly roundup of the best Substack posts, by hacker news affinity:

Walk Your Talk

do clouds feel vertigo? • 1 HN point • 31 Aug 24
💰 Finance Behavioral Finance
  1. Navigating emotions in finance is tough. Just like a story, the market has ups and downs, often driven by fear and greed.
  2. Understanding market patterns can help you make better choices. Key events, like earnings reports, can change how stocks perform quickly.
  3. It's smart to think about who benefits from market movements. Often, the loudest voices can mislead you, so keep a clear perspective.

How do equity analysts write a report?

Klement on Investing • 6 implied HN points • 25 Nov 25
💰 Finance Behavioral Finance
  1. Analysts focus on a few key drivers of company performance and change those priorities as the macro environment changes. For example, during inflation they paid more attention to supply-chain disruptions and rising costs.
  2. Valuation methods vary by region and shape what analysts look at: multiples (especially P/E) dominate in North America and Asia while DCFs are more common elsewhere, and multiples push analysts to stress customers, pricing and margins while DCFs push them to stress macro risk and investment activity.
  3. Relying on a single valuation method creates biased attention and mispricing — analysts using multiples tend to overreact to firm-level drivers and underreact to macro factors — so blending multiple valuation approaches gives a more balanced view and can reveal investment opportunities.

Short-term contrarianism, hedge fund edition

Klement on Investing • 2 implied HN points • 27 Nov 25
💰 Finance Behavioral Finance
  1. Hedge funds trim positions in stocks that have high short interest and are approaching their 52-week high, and they add to stocks with low short interest that are drifting away from their 52-week high.
  2. This positioning pattern is specific to hedge funds and isn’t observed with mutual funds or other types of investors.
  3. The trade appears to work short-term: high-short stocks near their 52-week high tend to fall over the next quarter, while low-short stocks far from their high tend to rise, producing profits for hedge funds.

A Watched Market Crash Pot Never Boils

QTR’s Fringe Finance • 26 implied HN points • 18 Nov 24
💰 Finance Behavioral Finance
  1. Focusing too much on a potential market crash can make it less likely to happen. Sometimes, it's better to step back and not overthink things.
  2. Jerome Powell's comments suggest that the Fed won't rush to cut interest rates anytime soon, even if the economy shows some strength. This means we should pay attention to long-term trends.
  3. The stock market can be influenced by expectations, not just current conditions. People hope for lower rates, but that hope doesn't always match reality.

Let me know if you intend to go to the movies this weekend

Klement on Investing • 1 implied HN point • 12 Dec 25
💰 Finance Behavioral Finance
  1. Higher box office revenues often show up when investor sentiment is weakening, and they can act as an early warning of poorer stock market returns.
  2. This may happen because people choose cheaper entertainment like movies when money is tight, or because they look for escapism when they feel gloomy.
  3. The relationship might be spurious and could change as streaming replaces theatre-going, so it’s risky to rely on box office as a reliable signal going forward.

Longs For Shy Bears

QTR’s Fringe Finance • 11 implied HN points • 06 Jan 25
💰 Finance Behavioral Finance
  1. It's important to focus on short-term survival in investing, even if you have long-term goals. You need to manage risks carefully in the volatile market.
  2. There are signs of extreme behavior in trends like crypto and AI, but not acting rashly is key. Timing and proper planning are crucial to avoid losses.
  3. The investor expresses a desire to bet against market crazes but acknowledges that it requires careful strategy to be successful.

Goebbels was right (on this point)

Klement on Investing • 3 implied HN points • 08 Aug 25
💰 Finance Behavioral Finance
  1. Many young people are getting financial advice from social media, which can be risky because there's a lot of misinformation out there. It's important to be careful and fact-check what you hear online.
  2. A study showed that if people see a piece of misinformation multiple times, they are more likely to believe it, especially if they feel confident in their financial skills. Repeated exposure can make false information seem true.
  3. Overconfident investors, often young men, tend to fall for repeated financial lies more than others. This overconfidence can lead to risky investment choices, especially in trends like cryptocurrency.

The behavioural biases of fund managers

Klement on Investing • 3 implied HN points • 06 Aug 25
💰 Finance Behavioral Finance
  1. Fund managers often struggle with behavioral biases just like everyone else. This means they can make mistakes based on emotions and perceptions.
  2. Loss aversion is a significant issue for fund managers, especially in hedge funds and money markets, but it's less of a concern for those managing equities.
  3. Interestingly, the size of the fund influences a manager's risk behavior, with larger funds being managed by individuals who tend to take fewer risks when facing potential losses.

The Masters in Finance Arts Department

Malt Liquidity • 8 implied HN points • 11 Feb 25
💰 Finance Behavioral Finance
  1. Writing often reflects personal experiences, but it can also be a form of storytelling that adds depth to facts. The best writing connects readers and creates an emotional response.
  2. Financial analysis is more about crafting a compelling narrative than it is about pure data. Understanding market trends and personal intuition can often be as important as mathematical models.
  3. In the future, traditional finance degrees may become less relevant, and skills like effective communication and critical thinking will be key. Learning how to sift through information and make sense of it is going to be very valuable.

Early to bed and early to rise…

Klement on Investing • 3 implied HN points • 25 Jul 25
💰 Finance Behavioral Finance
  1. Getting good sleep is really important for performing well in trading. If you're feeling tired, it's better to rest than to trade.
  2. Research shows that retail traders in different time zones have different returns, mostly due to how much sleep they get.
  3. Seasonal changes can affect how well traders do, especially in different parts of the US. In summer, those further north might earn less because they sleep less.

Risk of Ruin

Net Interest • 24 implied HN points • 13 Oct 23
💰 Finance Behavioral Finance
  1. Participants in a study about managing financial risk did not fully exploit their edge in a coin-flipping game.
  2. Proper position sizing is crucial in gambling and financial markets to maximize returns and manage risk effectively.
  3. Understanding and applying formulas like Kelly's criterion can help in making optimal bets and improving performance in investing.

What you see is all there is

Klement on Investing • 2 implied HN points • 16 Jul 25
💰 Finance Behavioral Finance
  1. People tend to focus only on the most obvious information when making decisions. This can lead to ignoring important factors like fund fees.
  2. A recent study showed that changing how fees are presented can significantly influence investment choices. Making fees stand out can lead to people choosing lower-fee funds more often.
  3. Simple changes in how information is displayed can help investors make better choices. This is important for improving their long-term financial success.

How masculine is your portfolio?

Klement on Investing • 2 implied HN points • 27 Jun 25
💰 Finance Behavioral Finance
  1. There are differences between how men and women invest, with studies showing that men tend to favor more 'masculine' industries like energy and utilities.
  2. The Portfolio Masculinity Index (PMI) helps identify the investment patterns of male fund managers and shows that portfolios with less masculine traits can perform better.
  3. If women managed the same assets as men, there would be a noticeable shift away from investing in traditional masculine sectors towards areas like technology and healthcare.

Investment heuristics cage match

Klement on Investing • 2 implied HN points • 25 Jun 25
💰 Finance Behavioral Finance
  1. Many investors, both retail and institutional, often rely on simple rules of thumb to make investment decisions. While some of these rules can be useful, others are not effective at all.
  2. Retail investors tend to use a variety of heuristics more frequently than chance, especially those influenced by social factors like peer behavior. This includes strategies like buying stocks from industries where they've previously profited.
  3. Institutional investors, on the other hand, use heuristics less often, but still show a reliance on social influences. Interestingly, their use of heuristics generally leads to better outcomes compared to retail investors.

Casting doubt on risk preferences

Klement on Investing • 2 implied HN points • 17 Jun 25
💰 Finance Behavioral Finance
  1. A recent study shows that how we measure risk preferences might not be accurate. People might choose safer options because they find complex math hard, not just because they're afraid of taking risks.
  2. Participants in the study reacted similarly whether faced with risky choices or complex ones. This raises doubts about whether traditional risk assessments truly reflect someone's risk tolerance.
  3. The results suggest that some risk assessments might actually measure how much people dislike complicated decisions instead of their real risk attitudes. We need to rethink how we evaluate risk preferences.

Remember, remember…

Klement on Investing • 3 implied HN points • 05 Nov 24
💰 Finance Behavioral Finance
  1. Our memories, especially specific experiences with the stock market, have a strong influence on how we decide to invest. Remembering good experiences can make us more willing to invest, while bad memories usually make us hold back.
  2. People who have personal memories about investing often ignore expert opinions because they trust their own experiences. In contrast, those without such memories are more likely to listen to experts and follow their advice.
  3. It’s important for investors to be aware of their biases from past experiences. Having a clear investment process can help avoid these mental shortcuts and lead to better decision-making.

Only academics believe in efficient markets

Klement on Investing • 7 implied HN points • 04 Jan 24
💰 Finance Behavioral Finance
  1. Academics believe in efficient markets where past news does not affect investment decisions.
  2. Non-academics like financial professionals and retail investors do change forecasts in response to old news.
  3. Real markets are not as efficient as academics think, incorporating psychology and fundamentals is important for investing success.

Value Investing I: The Back Story

Musings on Markets • 19 implied HN points • 23 Oct 20
💰 Finance Behavioral Finance
  1. Value investing does not have a single definition; different investors have their own ways of approaching it. Some focus only on low price-to-earnings or book value, while others consider management quality and market conditions.
  2. There are different styles of value investing like contrarian investing, where you buy stocks that have dropped in price, or activist investing, where you aim to change company management to unlock value. Each has its own strategy for finding value.
  3. The belief that value investing is the best way to achieve long-term success comes from both success stories and academic support. Many investors follow this philosophy because it combines strong principles and practical results.

What makes a market ‘look risky’?

Klement on Investing • 2 implied HN points • 27 Nov 24
💰 Finance Behavioral Finance
  1. How股票价格表现过往的涨跌次数会影响投资者的风险感知。投资者会觉得涨得多的股票更安全。
  2. 如果股票的涨跌超过某个时间段集中在一起，投资者会觉得这支股票风险更高，因为可能面临连续的亏损。
  3. 最近的表现越好，股票看起来越吸引人，风险感知也会降低。人们倾向于基于最新的结果来做决策。

Investing Whiplash: Looking for Closure with Apple and Amazon!

Musings on Markets • 19 implied HN points • 03 Dec 18
💰 Finance Behavioral Finance
  1. When investing, it's smart to set rules to avoid emotional decisions, like using limit orders to fight against personal biases.
  2. Intrinsic value of stocks can change over time, influenced by both company performance and broader market conditions.
  3. Investors should be flexible in their strategies, being willing to sell sooner if prices align with their valuations, even if it means not holding forever.

Why quality stocks perform so well

Klement on Investing • 2 implied HN points • 14 Mar 24
💰 Finance Behavioral Finance
  1. Companies with higher profitability, known as 'quality stocks,' tend to outperform less profitable companies in the market.
  2. Highly profitable companies do not necessarily come with higher risks, as they have lower probability of share price crashes and tend to perform better in negative market conditions.
  3. The outperformance of highly profitable companies seems to be driven by systematic market mispricing rather than compensation for higher risks, making it a potentially persistent investment strategy.

A Tale of Two Markets: Politics and Investing!

Musings on Markets • 0 implied HN points • 06 Jun 17
💰 Finance Behavioral Finance
  1. There is a big divide among investors about the current market. Some think a crash is coming while others believe a new bull market is starting.
  2. People are showing different feelings about risk. For some, the market seems stable, but others see a lot of uncertainty in economic policies.
  3. Consumer confidence is up, but spending hasn't followed. Both consumers and businesses feel good about the future, but they aren't investing as much as expected.

Decoding Expectations

inexactscience • 0 implied HN points • 20 Mar 23
💰 Finance Behavioral Finance
  1. Expectations are key to economic models because they shape how people behave and react to changes in the economy. For example, if people expect prices to rise, they may ask for higher wages.
  2. There is confusion about whether expectations tend to overreact or underreact to information. Evidence shows that expectations can do both—people might overreact to recent events but underreact to larger economic trends.
  3. Bias in expectations is often studied, but noise—random fluctuations and errors—is just as important and can affect forecasts significantly. Understanding both can help improve how we predict economic outcomes.

An October Surprise? Making Sense of the Market Mayhem!

Musings on Markets • 0 implied HN points • 29 Oct 18
💰 Finance Behavioral Finance
  1. It's important to stay calm and avoid making hasty decisions during market drops. Taking a moment to breathe and disconnect from constant news can help keep your mind clear.
  2. Assessing the situation carefully is crucial. Look at the facts behind the market movements instead of jumping to conclusions about what's causing the drops.
  3. Sticking to your investment strategy is key. Don't let fear lead you to stray from your goals, and regularly evaluate your stocks to ensure they still fit your plan.

Illusion, Perception and Reality: Stock Splits and Index Inclusions

Musings on Markets • 0 implied HN points • 01 Sep 20
💰 Finance Behavioral Finance
  1. Stock splits and index inclusions may seem unimportant, but they impact market behavior. They can cause prices to move even without changes in a company's real value.
  2. Value events, gap events, and pricing events are all different types of stock market occurrences. Each type changes prices in different ways, whether by affecting value, closing price gaps, or changing investor sentiment.
  3. Traders often react to stock splits and index changes to capitalize on market momentum. However, long-term investors should focus on fundamentals instead of getting swayed by these temporary market changes.

The impossible quest for fair markets: Pokemon cards, HFT and Life lessons

Musings on Markets • 0 implied HN points • 25 Mar 14
💰 Finance Behavioral Finance
  1. Markets are often unfair, just like my son's Pokemon trading experience. Some kids had advantages that made it hard for others to compete.
  2. In trading, you can either adapt your strategy or exit the game if you feel outmatched. Sometimes stepping back is the best choice.
  3. High-frequency trading has changed how the market works. Instead of trying to beat those with more technology, consider being an investor and focus on the actual value.

The Search for Investment Serenity: The Look Back Test!

Musings on Markets • 0 implied HN points • 20 Apr 15
💰 Finance Behavioral Finance
  1. Investors should regularly review their past investments to make better decisions. This means questioning whether to buy, hold, or sell based on current valuations.
  2. It's important to be open about mistakes and avoid emotional decision-making in investing. Being transparent can help you learn and improve your strategy.
  3. Having a balanced approach to investing is key. Too much faith can lead to ignoring potential issues, while too little can cause you to abandon good investments too soon.

DCF Myth 3: You cannot do a valuation, when there is too much uncertainty!

Musings on Markets • 0 implied HN points • 02 May 16
💰 Finance Behavioral Finance
  1. You can still do valuations even when there's a lot of uncertainty. It's actually common to face unknowns in investing.
  2. Uncertainty can lead to bad decision-making like inaction or relying too much on others' opinions. Being aware of how uncertainty affects you is key.
  3. Having a clear story or narrative about a company helps during uncertain times. It can guide your decisions and make valuations feel more grounded.

Myth 4.2: It's all about D in the DCF

Musings on Markets • 0 implied HN points • 04 Nov 16
💰 Finance Behavioral Finance
  1. Many people focus too much on discount rates when valuing investments, often ignoring cash flows and growth rates, which are just as important.
  2. Getting the discount rate wrong can lead to big mistakes in valuation, but the range of costs of capital is often quite similar across different companies.
  3. Instead of stressing over discount rates, we should prioritize accurately estimating future cash flows and growth, especially for younger companies.

Mean Reversion: Gravitational Super Force or Dangerous Delusion?

Musings on Markets • 0 implied HN points • 31 Aug 16
💰 Finance Behavioral Finance
  1. Mean reversion is the idea that extreme results will return to the average over time. This is seen in sports and investing, but it can lead us to make wrong assumptions about future performance.
  2. There are two types of mean reversion: time series mean reversion, which looks at past average values over time, and cross-sectional mean reversion, which compares values against the average of similar items. Both have their own risks and assumptions.
  3. Structural changes in the economy or companies can disrupt mean reversion, meaning trusting it too much could lead to poor investment decisions. It's important to stay aware of these changes and not just rely on historical data.

hindsight bias

Thái | Hacker | Kỹ sư tin tặc • 0 implied HN points • 21 May 08
💰 Finance Behavioral Finance
  1. Hindsight bias is the tendency to believe that outcomes were predictable, even though they may not have been at the time.
  2. People often overestimate their ability to predict future events based on their perceived success in predicting past events.
  3. There are numerous factors that can influence stock market outcomes, making it difficult to accurately predict future market behavior.