5 Behavioral Biases and the Investment Implications

We have consistently written about the significant role people have on their own investment performance. I decided in this post to add a video to mix up the delivery, but not the message. The attached video is from our partner, Dimensional Fund Advisors (DFA), and as we are a strong advocate for investing by capturing exposure to the equity markets using asset classes, we are a strong proponent of DFA.

Founder of DFA

Founder of DFA

 

Research indicates that humans are not naturally wired for prudent, long-term investing. Scott Bosworth, Vice President and Regional Director at our partner Dimensional Fund Advisors, describes the 5 common forms of behavioral bias and discusses how these biases influence investment decision making.

We describe ourselves as behavioral advisors who help coach our clients to have the discipline and patience needed for long-term investing. We coach them to help influence their own behaviors in order for them to have the discipline to maintain their plan that will achieve their goals.

 

 

Scott also explains how knowledge and discipline can help investors control their instincts for a better investment outcome. This is a longer video at 20 minutes than I normally post, but I believe that this will be beneficial for those who view it.

Watch for the quote near the end from our friend – Nick Murray. Behavioral Biases Video

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About Dan Crimmins

Dan Crimmins, co-founder of Crimmins Wealth Management, is a financial coach and fee only financial planner. Have a financial question? ASK DAN

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