Investor Risk: Behavioral Biases That Can Cost Investors Returns

Investment returns are expected, not promised. To capture them, investors should both intelligently take risks and stick around for the return. In episode 16 of Greenstream, we break down the psychological and behavioral biases that can hold us back. Investors should view these as penalties or unforced errors that make winning your game harder.

You'll learn:

• What we believe to be biases and how they manifest themselves in portfolios
• Why diversification, patience, and tax discipline matter more than you might think
• How the Stockdale Paradox provides a framework for long-term resilience

 

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Sources:

1 Are Financial Advisors Worth Their Fee? | Greenstream #13 https://youtu.be/Is7N5M4e4Ck

2 Investment Risk Explained: How Much Diversification Do You Need? | Greenstream #15 https://youtu.be/yEqRrXDAe7A

3 Barberis, Nicholas and Barberis, Nicholas and Thaler, Richard H., A Survey of Behavioral Finance (2002). https://ssrn.com/abstract=327880

4 Barber, Brad M. and Odean, Terrance, Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment (1998). https://ssrn.com/abstract=139415

5 Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. https://ssrn.com/abstract=219228

6 Odean, Terrance, Do Investors Trade Too Much? (1998). https://ssrn.com/abstract=94143

7 Collins, Jim, The Stockdale Paradox. https://www.jimcollins.com/concepts/Stockdale-Concept.html 

 

Greenspring Advisors is a registered investment adviser with the SEC and does not provide tax, legal or accounting advice. Information contained herein has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. It is not intended as the primary basis for financial planning or investment decisions and should not be construed as advice meeting the particular investment needs of any investor. This material has been prepared for information purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance is no guarantee of future results.