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Payne's Perspective: March 11, 2024: Not Overconfident...Yet!

By Charles Payne CEO & Principal Analyst

The Prospect Theory comes with the following characteristics:

1. Certainty

2. Small probabilities

3. Relative positioning

4. Loss aversion

The theory is that people make decisions based on preventing loss rather than achieving optimal outcomes. There are two phases to the decision–making process:

  • Editing -  this is where framing happens, influencing wording, order, and choices
  • Evaluation – we layer our outcomes

Behavioral Economics

Investors usually make decisions largely based on the Prospect Theory until there is such a shift in general exuberance it causes everyone to throw caution to the wind.

Throwing Caution to the Wind:

  • Overconfidence
  • Loss aversion
  • Self-control

To read full report contact your account representative or email Info@wstreet.com. 

Charles Payne
Wall Street Strategies


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