Description

What are some of the behavioral tendencies we all can run into that affect our decision-making, and ultimately cause some big mistakes? What do big areas or behavioral tendencies look like?

In this episode of the Finance for Physicians Podcast, Daniel Wrenne talks about investing behaviors that will wreck your financial plan. Knowledge and awareness are needed to avoid behavioral finance mistakes.

Topics Discussed:

• What is behavioral finance? When people make errors, mistakes, and biases
• Why? People are not rational or self-controlled and don’t identify tendencies
• Overconfidence: Common idea that you know more than you actually do
• Self-serving Bias: Attribute good things/outcomes to skill, bad outcomes to luck
• Hindsight Bias: You know more or knew more than you really did in the past
• Confirmation Bias: Focus on what confirms beliefs, ignore what contradicts them
• Recency Bias: Hone in on short-term and overemphasizes that importance
• Refer to your financial plan and remind yourself of your financial goals
• Anchoring Bias: Relying and latching onto too much pre-existing info
• Loss Aversion: Overly fearful of losses and pull to avoid losses
• Herd Mentality: Suffer from fear of missing out (FOMO)?

Links:

Confirming Fund Managers Overconfidence - SSRN

Behavioral Finance - Charles Schwab Asset Management

What To Do When Your Investments Start Tanking

How Market Downturns Look and Feel

The Power Of Diversification

Investing During Wild Markets with David Blanchett

Free DIY Financial Planning Guide for Physicians

Predictably Irrational: The Hidden Forces That Shape Our Decisions

Thinking, Fast and Slow

The Psychology of Money: Timeless lessons on wealth, greed, and happiness

The Big Short

GameStop on CNBC

Contact Finance for Physicians

Finance for Physicians

Full Episode Transcript:

Hey, guys. Hope you’re having a great day. I am excited to talk about investing, and this is the third in our series of three shows, talking investing. In the first, we talked a little bit more about how to navigate scary downturns in the market. The second, we talked more about how those looked historically, some of the numbers, returns and that kind of thing.

Today, we’re going to be talking about some of the behavioral tendencies we all can run into that can really affect our decision-making, and ultimately can cause some big mistakes. We’re going to get into that today.

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