Psychology—the study of what makes us tick—is endlessly fascinating. I’m especially intrigued that it plays such a strong role in investing, an arena generally thought to be made up of cold numbers. When making investment decisions, our behavior is sometimes erratic, often contradictory, occasionally goofy. Sometimes our illogical decisions are consistently illogical, and sometimes no pattern is discernible. We make good decisions for inexplicable reasons and bad decisions for no good reason at all. What all investors need to internalize is that they are often unaware of their bad decisions.
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