20 Aug 2019
Behavioral Finance: Rollercoaster of investment emotions
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
The vast majority of investors are consistently bad at dealing with uncertainty, underestimating some risks and overestimating others.
This behavior has been repeatedly played out over and over again during the past 28 years of my professional career and will continue to be repeated over the next 28 years.
Research into behavioral finance and behavioral economics has uncovered that our cognitive biases lead to our poor decision making are they are not random, in fact these mistakes are systematic and predicable which implies that they can be greatly reduced.
The key to overcoming these cognitive biases as an investor is to be aware of them before making a poor decision.
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