Wednesday, August 10, 2011

Don't Let Market Volatility Lead To Regrettable Investment Decisions...


  • “Individuals who cannot master their emotions are ill-suited to profit from the investment process.” - Benjamin Graham

  • Emotional investment reactions to sudden market declines and increased volatility tend to be driven by human behavioral biases, such as loss aversion.

  • Historical patterns of investor behavior show that surging equity market volatility can cause some investors to make hasty, emotionally charged investment decisions that often turn out to be regrettable.

  • Recognizing innate biases may help prevent investors from tampering with a well-crafted portfolio strategy during periods of severe market turmoil.

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