Finance By James Dolan 11 investment biases that may be holding you back How to understand (and master) the secret psychology that may be sabotaging your investment decisions A lot of people think that investing is about the math: crunching performance data, calculating investment returns, analyzing risk and return statistics, and so on. If we can master this knowledge, we can master the market, and become millionaires. Well, maybe. It’s not that numbers, math and knowledge don’t matter. It’s just that there’s another powerful force that shapes markets: emotion. In the real world, investment decisions are shaped by the emotional biases, beliefs, fears and hopes of all investors. Truth be told, impatience, greed, pride and good ol’ fashioned mental laziness can play just as big a part in an investment decision as statistics, calculations and reasoned analysis. But here’s the good news: if we understand how these various forms of investment bias can sabotage our investment decisions, we can learn to control (and hopefully, neutralize) their e ects on our portfolios. With that in mind, here are 11 biases, prejudices and mental errors that might be a ecting your nancial thinking and preventing your portfolio from achieving its full potential. 32 | www.snowbirds.org
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