#behavioralfinance

This short video discusses ambiguity aversion, just one of the many biases and habits that lead to poor investing decisions. Why do we typically choose known outcomes over the unknown, even if the unknown has significantly more upside?

BFSG Shorts: Ambiguity Aversion

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s website or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by Company), will be profitable or equal any historical performance level(s). Please see important disclosure information here.

“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.” – Charles MacKay

What is Herding Bias? In behavioral finance, herding bias refers to investors’ tendency to follow and copy what other investors are doing.  When markets are volatile, it could lead to behavior that is not fully rational such as selling a stock based on emotion, rather than by your own independent analysis. Don’t be a sheep and dare to stand out from the crowd.

BFSG Shorts: Herding Bias

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s website or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by Company), will be profitable or equal any historical performance level(s). Please see important disclosure information here.

How much “noise” is the media pushing out to us every day? And even more important, how often does this seemingly important “breaking news” that might impact markets today, actually have a long-lasting impact a long-term results? Find out more here and learn about recency bias, just one of the many biases and habits that lead to poor investing decisions.

BFSG Shorts: Recency Bias

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s website or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by Company), will be profitable or equal any historical performance level(s). Please see important disclosure information here.

Behavioral investing has quickly become one of the most important topics for individual investors, whether talking about their retirement accounts or brokerage accounts alike. This video discusses anchoring bias, just one of the many biases and habits that lead to poor investing decisions.

BFSG Shorts: Anchoring Bias

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s website or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by Company), will be profitable or equal any historical performance level(s). Please see important disclosure information here.

Mr. Market, the imaginary investor in Ben Graham’s book, The Intelligent Investor, is willing to constantly buy or sell a stock based on whether it has recently gone up or down. Yet, these actions are based on the emotion of recent events, and not on sound investing principles. Ben Graham’s most famous student, Warren Buffett, understands the importance of keeping his emotions in check and during the 3^rd quarter when Mr. Market was overly optimistic, Warren chose to “be fearful when others are greedy”.

As we previously stated in our prior blog post, The Intelligent Investor, Ben Graham said, “The typical experience of the speculator is one of temporary profit and ultimate loss”. These manic-depressive investors (aka Mr. Market) will eventually learn some very old lessons.

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s web site or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please see important disclosure information here.