March 2, 2015

A Good Time to Review Investor Biases

Investors (all of us) are hard-wired to make poor investment decisions.  Among other biases, we become over-confident when markets rise and assume the worst will continue when markets fall. We assume we have special knowledge about companies we work for or live close to or use the products made by. We focus on short-term investment returns when reviewing portfolio returns. (Yes, even a year is short-term when reviewing investment returns).

A recent Wall Street Journal article delves into our biases and points out that as U.S. markets continue to test new all-time highs in the fifth year of a bull market, this is a good time to check your investor biases.


Stock market