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Listen " Investing Behaviors That Will Wreck Your Financial Plan "
Episode Synopsis
What are some of the behavioral tendencies we all can run into that affect our decision-making, and ultimately cause some big mistakes? What do big areas or behavioral tendencies look like?
In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about investing behaviors that will wreck your financial plan. Knowledge and awareness are needed to avoid behavioral finance mistakes.
Topics Discussed:
What is behavioral finance? When people make errors, mistakes, and biases
Why? People are not rational or self-controlled and don’t identify tendencies
Overconfidence: Common idea that you know more than you actually do
Self-serving Bias: Attribute good things/outcomes to skill, bad outcomes to luck
Hindsight Bias: You know more or knew more than you really did in the past
Confirmation Bias: Focus on what confirms beliefs, ignore what contradicts them
Recency Bias: Hone in on short-term and overemphasizes that importance
Refer to your financial plan and remind yourself of your financial goals
Anchoring Bias: Relying and latching onto too much pre-existing info
Loss Aversion: Overly fearful of losses and pull to avoid losses
Herd Mentality: Suffer from fear of missing out (FOMO)?
Links:
Confirming Fund Managers Overconfidence - SSRN
Behavioral Finance - Charles Schwab Asset Management
What To Do When Your Investments Start Tanking
How Market Downturns Look and Feel
The Power Of Diversification
Investing During Wild Markets with David Blanchett
Free DIY Financial Planning Guide for Physicians
Predictably Irrational: The Hidden Forces That Shape Our Decisions
Thinking, Fast and Slow
The Psychology of Money: Timeless lessons on wealth, greed, and happiness
The Big Short
GameStop on CNBC
Contact Finance for Physicians
Finance for Physicians
Full Episode Transcript:
Hey, guys. Hope you’re having a great day. I am excited to talk about investing, and this is the third in our series of three shows, talking investing. In the first, we talked a little bit more about how to navigate scary downturns in the market. The second, we talked more about how those looked historically, some of the numbers, returns and that kind of thing.
Today, we’re going to be talking about some of the behavioral tendencies we all can run into that can really affect our decision-making, and ultimately can cause some big mistakes. We’re going to get into that today.
This is a big to...
In God we trust