Behavioral Finance

We know that investing over the long-term is where wealth is made, but this doesn’t change the fact that there is excitement in playing the market game.

What makes a good investor? While mastering the art of patience plays a role, it also comes down to learning and feedback.

Investment planning isn’t synonymous to gambling in a casino, but the two realms do share insight that can lend valuable lessons to today’s investors.

In the world of investing, critiquing prior financial choices is common, and is what economists refer to as “hindsight bias”.

As author Morgan Housel says, historical events which reap takeaways that can be applied to broad areas of life often contain some of the most valuable insight.

Momentum from extreme highs and mean reversion from extreme lows create the “most powerful forces in markets”, prompting above-average returns.

The words “Uncertainty” and “Unprecedented” have circulated news outlets more times throughout the past two years than possibly ever before. However, it’s important to note that the uncertainty we’re experiencing as a country today isn’t in theory higher than it was five or more years ago.

In the world of investing, loss aversion is a cognitive bias which means your losses hurt twice as bad as any gains of the same value. It can be one of the most common (and challenging) hindrances to overcome in making sound investment decisions, and might also cause you to develop a case of “Get Even-itis”.

When it comes to investing, you might have heard it’s best to separate your emotions from your financial decisions; however, doing so causes you to eliminate your life’s worth of wisdom.

In reality, upside surprises occur more than we might realize, and this is due to what Magguilli refers to as “geometric growth”, versus our default way of viewing expansion, which is “linear growth”.

When it comes to successful investing, Jack Bogle once advised, “Don’t do something; just stand there”, and he makes a fair point.

The behavior and decisions you make around money root far deeper than you might ever realize.