Economics isn’t named the dismal science for no good reason. In terms of the accuracy of its predictions, it has more in common with Astrology than Physics or Chemistry. Seriously, if you had based your investment decisions on their predictions on when the economy would turn, I wouldn’t be surprised to find you living in the streets today.

The problem is, these economic models are based on the BIG assumption that human beings are rational. But are we really that rational? (I start to think of those big diamond rings and their price tags)

Seems not, especially if you have been following the latest research and findings from Behavioral Finance/Economics. These stuff (as compared to the latest macro models) have grown increasingly popular and have even entered the mainstream consciousness (you know it when you find books like Nudge and Thinking, Fast And Slow appearing at Popular bookstores).

For example, I might have identified a stock with a share price of ...