15 Biases That Make You A Dumb Investor

October 1, 2013 3:00pm by Barry Ritholtz

I am off to Toronto, where I am presenting at the annual CFA forecasting dinner. (I am the counter-programming, which means I get to explain why you humans are so bad at forecasting.

From Morgan Housel, here are several cognitive biases that cause you to do dumb things with your money. Be sure to check out the entire article.

15 Biases That Make You Do Dumb Things With Your Money
1. Normalcy bias
2. Dunning-Kruger effect
3. Attentional bias
4. Bandwagon effect
5. Impact bias
6. Frequency illusion
7. Clustering illusion
8. Status quo bias
9. Belief bias
10. Curse of knowledge
11. Gambler’s fallacy
12. Extreme discounting
13. Ludic fallacy
14. Restraint bias
15. Bias bias

I like Nobel Prize winning cognitive psychologist Daniel Kahneman’s take on this: He once said, “I never felt I was studying the stupidity of mankind in the third person. I always felt I was studying my own mistakes.”

Source:
15 Biases That Make You Do Dumb Things With Your Money
Morgan Housel
Motely Fool, August 30, 2013
http://www.fool.com/investing/general/2013/08/30/15-biases-that-make-you-do-dumb-things-with-your-m.aspx

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