Investor psychology
Why decisions turn out differently from the plan: fear of missing out, loss aversion, herding.
8 articles
How to live through a drawdown without making decisions you regretA practical set of techniques for the period when the portfolio is falling and doing something feels urgent.
Anchoring: why the purchase price keeps influencing decisionsThe price you paid has no bearing on the security's future. The brain thinks otherwise.
Herd behaviour: why a crowd is convincingAgreement from the majority feels like proof. In markets it more often signals that the price has already absorbed the consensus.
The illusion of control: why activity feels usefulMore trades feel like more management. The effect on results runs the other way.
Confirmation bias: why we only find arguments in favourAfter a purchase, attention selectively hunts for confirmation. That turns analysis into self-service.
Survivorship bias: why success statistics misleadWe see those who made it and not those who dropped out. That makes any strategy look better than it is.
Fear of missing out: why people buy at the highsWatching someone else's profit feels like a loss of your own. That feeling is what produces purchases at the worst point.
Loss aversion: why a loss hurts more than an equal gain pleasesAn asymmetry of perception that makes losing positions get held longer than winning ones.