In our initial “Worth Mentioning” note last quarter, we wrote that the intent of this correspondence is to address a single investment topic from a fresh perspective.  As topics go, the headline above would seem a little ambitious for this format, but we’ll use this as a brief introduction to the compelling principles of Behavioral Finance.

Most investors are familiar with the claim “It’s different this time” - a siren’s song, often heard right before the inevitable collapse of whatever was supposed to be different. We heard it in spades with the dotcom craze. At its essence, it is a rationalization for chasing performance (against one’s better judgment) and is usually all you need to hear before knowing you need to go the other way – fast.