Run, don’t walk to read the first Washington Post print column by Barry Ritholtz…
In my work, I use behavioral psychology, statistics, cognitive biases, history, data analysis, mathematics, brain physiology, even evolution to make better investing decisions. Indeed, these are all key to learning precisely what not to do. While making good decisions can help your portfolio, avoiding bad ones is even more important.
We humans make all the same mistakes, over and over again. It’s how we are wired, the net result of evolution. That flight-or-fight response might have helped your ancestors deal with hungry saber-toothed tigers and territorial Cro Magnons, but it drives investors to make costly emotional decisions.
And it’s no surprise.
It’s akin to brain damage.
Nothing can be more damaging to a portfolio than emotional decision-making and nothing engenders more emotional decision-making than politics. Get over there for the whole thing…