Introduction to the ABCs of Behavioral Biases
Legendary economist Benjamin Graham once stated that ‘your own behavioral biases are often the greatest threat to your financial well-being.’
April 30, 2024
Legendary economist Benjamin Graham once stated that ‘your own behavioral biases are often the greatest threat to your financial well-being.’
Four self-inflicted biases that knock a number of investors off-course are anchoring, blind spot, confirmation and familiarity bias.
In the latest installment of our Behavorial Biases Series, let’s tackle fear, FOMO (greed), framing and herd mentality.
In the latest installment of our Behavorial Biases Series, let’s look at hindsight, loss aversion, mental accounting and outcome bias.
In this installment of our Behavorial Biases Series, let’s look at overconfidence, pattern recognition and recency.
In the final installment of our Behavorial Biases Series, let’s take a deeper dive in sunk cost fallacy and tracking error regret.
During this series, we have learned that our own behavioral biases are often the greatest threat to our financial well-being.
It helps to know what you are facing in investing. Play with and not against market forces by understanding how market pricing occurs.
What causes market pricing to change? It begins with the constant stream of news informing us of the good, bad and ugly events taking place.
Independently thinking groups (like capital markets) are usually better at accurate answers than even the smartest individuals in the group.
The market’s price-setting efficiencies start with diversification being among your greatest financial friends.
To understand, avoid and manage investment risks, there are two main types in avoidable concentrated risks and unavoidable investment risks.
Diversifying is not perfectly predictable, but it offers a blanket of coverage for capturing random market returns where and when they occur.
Investing requires an understanding of how to build a diversified portfolio to more effectively capture long-term global market returns.
It is easier to stick with your investment selections if you use a rational methodology such as evidence-based investing.
Grounding your investment strategy in rational methodology strengthens your ability to stay on course toward your financial goals.
Continued research has helped us identify additional market factors at play, with additional potential premiums.
Arguably, the most significant factor in your evidence-based investment strategy is the human factor.
On the topic of evidence-based investment insights, let’s talk about behavioral biases that can trigger unsound investment decisions.
In the final installment of our Evidence-Based Investment Insights Series, let’s review the key take-home messages from each installment.
The more wealth you accumulate, the more chaotic your assets and accounts can become. That is why being financially organized is paramount.
In the second installment of our ‘Bringing Order to Your Investment Universe’ Series, let’s talk about transitions and taxes.
In the final installment of our ‘Bringing Order to Your Investment Universe’ Series, let’s talk about optimizing your organized investments.
Reviewing estate planning documents is an important exercise, but it can be a daunting task that is tedious and even confusing at times.
While most people know what they should be doing, they still often fall short of properly tracking and managing cash flow.
There are issues to consider when buying a home, including how the costs of purchasing and owning a home will impact your financial goals.
Reviewing your investment portfolio is a critical part of the financial planning process. This checklist covers some key topics to consider.
The goal of this checklist is to help you become better equipped to navigate the process of selling your home.
Life insurance is a complex topic, and it often leaves many people confused about what they should do with their existing policy.
The end of the year presents a number of planning opportunities and discussion topics that can help keep your financial goals on track.
The start of the new year is a great time for a financial check-up. Here are a few of the issues you should consider.
When you are selecting or retaining a financial advisor, how do you know if you are making the best choice?
Beyond fiduciary advice, there are other qualities to seek from an advisor who is willing to sit on the same side of the table as you.
When it comes to selecting a financial professional, how do you recognize fiduciary advice in a crowded field of look-alikes?
If you are new to investing, it can be tough to know where to get started. There is so much information and advice out there.
In the second part of this young investor series, we discuss three more investment concepts every young investor may want to embrace.
Let’s talk about how to minimize the financial mistakes that matter the most, and make the most of the ones that remain.
Are crowds wise, or are they delusional? The quick answer is both, and each can play a role in our investment decisions.
As an investor, second-guessing a stable strategy can leave you in the weeds. The best course of action is sticking to your investment plan.
Compounding is a deceptively simple but exceptionally powerful tool that can help you produce investment growth.
When you initiate a credit freeze, you stop lenders from accessing your credit report.
After all the saving and planning you have done, what should you do if there is still money left over in your child’s 529 plan?
Congress recently passed a sweeping tax and spending policy bill with lots of long-term implications.
Recency bias leads us to believe that this summer has been overloaded with more major events than in previous years.
Obviously, before you can invest, you have to save. But knowing this is true does not always make it easy to do.
As part of our Investment Basics Series, we are looking at where stock market returns really come from and why that matters.
Stock pricing can be both remarkably efficient in aggregate, as well as wildly unpredictable from one moment to the next.
Once you have structured your investments to capture available, risk-adjusted market returns, you will need to stay on track as planned.
Whether you are considering an investment opportunity or simply browsing various media, you cannot believe everything you see, hear or read.
Today, let’s talk about your emotional reaction to unfolding news, and the impact that it can have on your financial well-being.
In the financial jungle, it’s essential to look before you leap at emotion-triggering misinformation. Here are five “do’s” and “don’ts” for due diligence.
There are only so many hours in the day to do all the financial fact-checking you would like to when deciding who and what to believe.