Studies abound showing how our mental biases thwart sound investing decisions.
Value Stock Guide has compiled the five main ways this happens into a nifty infographic (via Eddy Elfenbein).
You should check out the whole thing, but real quickly, the 5 common ways your brain screws you up are:
- You do what everyone else is doing because of herd behaviour.
- You confuse “cheap” with “value.”
- You throw good money after bad.
- You practice loss aversion and that leads to bad choices.
- You think the future is more unpredictable than it is.
Check it out: