1) Anchoring — Investors set arbitrary reasons for continuing to hold a stock, even as the price tanks. They’ll hold onto Company X Stock, even if there is no good reason to hold onto Company X Stock.
2) Too many choices, too many voices — With choices, investors have to have a clear direction of what to do. With voices, they listen to friends, co-workers, relatives and of course the media, the latter of which have an outsize influence on decision-making. “Everyone seems to have an uncle in the business."
3) Runaway expectations — Some investors tend to overemphasize recent trends, which often are not the best way to analyze investments.
4) Fear of regret — People hate to be wrong, especially when they perceive everyone else to be right, so they’ll jump in on an investment trend for that reason, which results in them buying at the wrong time and selling at the wrong time.
5) Fear of loss — Studies show that people feel the sting of a loss twice as much as the euphoria of a gain.
Source: ThinkAdvisor
The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.
The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville. The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.
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