The Psychological Bias Surrounding Disney Stock

When I first wrote about Disney’s risk related to ESPN subscriber loss about a month or so ago, I meant to write an immediate follow-up post that discussed three factors that makes Disney a good case study right now for studying the psychological factors that affect people’s investment perceptions: (1) headline risk, (2) groupthink, and (3) the tendency to “secure” quick short-term gains at the risk of making substantially more money over a 20+ year holding period.

Before we talk about headline risk, you should pause and read this excellent piece by Maria Konnikova in the December 2014 New Yorker titled “How Headlines Change The Way Think” that discusses some University of Western Australia studies on how the specific headlines we encounter has a disproportionate impact on the conclusions that we draw from reading the articles. Although there have been a decent amount of Star Wars articles written … Read the rest of this article!