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You're making big financial mistakes – and it’s your brain’s fault
01-08-2019, 07:33 PM.
Post: #1
You're making big financial mistakes – and it’s your brain’s fault
You’re making big financial mistakes – and it’s your brain’s fault

Ric Edelman
1 August 2019

Since 1988, the stock market’s average return has been 10% per year. But stock fund investors have earned only 4.1% per year, according to Dalbar’s Quantitative Analysis of Investor Behavior.

So, why are investors missing out on 60% of the market’s profits?

Because your brain gets in the way.

Survival instincts have evolved into “behavior biases” that cause us to make bad financial and investment decisions. Understanding them can help you avoid costly mistakes. Let’s look at five of the most important biases researchers have identified.

1. Herd mentality bias
2. Overconfidence bias
3. Recency bias
4. Action bias
5. Availability bias

More details in https://www.cnbc.com/2019/07/31/youre-ma...fault.html
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