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December 20, 2004
Eight+ human tendencies to make investing mistakes
Human beings, it turns out, are wired to make dumb investing mistakes. What's more, we are wired not to learn from them, but to make them again and again. If there is consolation, it is that it's not our fault. We are born suckers.
In the past 30 years, academic research has progressed beyond efficient-markets theory, which mistook humans for robots, into behavioral finance, which acknowledges that we are, in fact, sweating, breathing, herding, hoarding, pleasure-seeking, pain-avoiding animals who employ a looser definition of "rational" than computer chips. A full enumeration of the innate tendencies that doom most of us to investing mediocrity would fill a hard drive. So, here are some highlights...
Born Suckers - The greatest Wall Street danger of all: you. By Henry Blodget
Posted by thdyck on December 20, 2004
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