Trader's Thread 05 (Jan 20 - Dec 26)

[winston]

Nine types of behavior that plague investor

1. Loss aversion – expecting to find high returns with low risk

2. Narrow framing – making decisions without considering all implications

3. Mental accounting – taking undue risk in one area and avoiding rational risk in another

4. Diversification – seeking to reduce risk, but simply using different sources

5. Anchoring – relating to familiar experiences even when inappropriate

6. Media response – the tendency to react to news without reasonable examination

7. Regret – treating errors of commission more seriously than errors of omission

8. Herding – copying the behavior of others, even in the face of unfavorable outcomes

9. Optimism – the belief that good things happen to them, while bad things happen to other people

Source: Hypergrowth Investing