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Behavioral Finance Articles

Trading More Frequently Leads to Worse Returns

November 2014 by Charles Rotblut
The stocks investors buy, on average, underperform the ones they sell due to behavioral errors, such as overconfidence. Read more »

Driving Emotions From Your Investment Process: A 12-Step Program

September 2014 by Thomas Howard
These 12 steps, which include forgetting the price paid for an investment, can drive emotions out of your investment decision process. Read more »

The Case for Systematic Decision-Making

April 2014 by Wesley R. Gray
Though human expertise is needed to design models, models perform better than humans because they aren’t subject to behavioral biases. Read more »

The Role of Luck and Skill in Investing

September 2013 by Michael Mauboussin
Since luck plays a bigger role than skill in influencing investment returns, investors need to focus on their portfolio management process. Read more »

Five Steps for Gaining Control of Your Investments and Avoiding Mistakes

March 2013 by Carl Richards
Simple actions you can take now to focus on the things you can control and avoid making common investment mistakes. Read more »

How Investors Miss Big Profits

October 2012 by Louis Harvey
Individual investors underperform the mutual funds they invest in, but they can take advantage of psychological behaviors to improve their returns. Read more »

The Good Investor Rule: Focus on How Not to Lose Money

July 2012 by Steven Sears
Many investors place on emphasis on making money, but successful investors focus more on how not to lose money. Read more »

Behavioral Errors Hurt Your Returns

July 2012 by Daniel Kahneman
Individual investors hurt their performance by buying and selling too often, picking the wrong securities to trade, and being overconfident. Read more »

Dishonesty, Choices and Investing

June 2012 by Charles Rotblut
The financial industry’s bad incentive structure leads to higher costs, but investors can counteract dishonesty simply by asking direct questions. Read more »

Updating Modern Portfolio Theory for Investor Behavior

April 2012 by Greg B. Davies
The optimum portfolio is not only based on the expected risk and return of the investments, but considers an investor’s tolerance for risk. Read more »

Aging and Investing: The Risk of Cognitive Impairment

September 2011 by David Laibson
Cognitive impairment afflicts approximately half of all 80-year-olds. However, there are steps investors can take to protect themselves financially. Read more »

Managing the Mental Aspect of Investing

May 2011 by Meir Statman
Investors should consider whether they are being influenced by a good or bad herd behavior and who is on the other side of a trade. Read more »

15 Short-Cuts and Biases That Lead to Bad Investment Decisions

May 2006 by Paul S. Szczygiel
Mental short-cuts simplify our complex world and help individuals form rules of thumb that work for many decisions. But they don’t work perfectly and can give rise to misperceptions that lead to decision-making errors. Worse, most people are unaware these biases exist. Fifteen common mental mistakes that lead to money-losing investment decisions. Read more »

Fund Investors' Biggest Mistakes and How You Can Avoid Them

Fund investors are not immune to mistakes, and fund managers can compound mistakes made by fund owners. One of the biggest mistakes is overconfidence, and the stock market is highly effective at deflating overblown egos. Read more »