Episode 29: What really drives the outcome of your investment portfolio—market performance or your own behavior?
Investors often view returns as a purely quantitative result of markets, risk, timing, or expertise. Yet psychology tells a different story.
Emotions and behavioral biases quietly shape decisions, frequently pushing investors away from their long-term goals.
Any number of common biases can show up again and again in real life. For example, hindsight bias makes unpredictable events feel obvious after the fact, while the illusion of control leads investors to overestimate their ability to influence outcomes.
Pattern-seeking behavior can cause people to see meaning in random data, and beliefs about reversion to the mean may encourage premature or poorly timed decisions.
Others include confirmation bias and attribution bias (crediting skill for success but blaming markets for failure).
The discussion goes further, examining deeper categories of bias. Encapsulated biases are emotionally driven and resistant to logic, while attentional biases cause investors to overlook critical information.
Then there is the GI Joe fallacy—the false belief that simply knowing about biases is enough to overcome them.
In Episode 29 of The Informed Investor, Dimensional's Mark Gochnour, Head of Global Client Services, Scott Bosworth, Head of the Speakers Bureau, and Jake DeKinder, Head of Client Communications, dive into behavioral finance—the study of how psychology impacts investor behavior—to explore how our emotions influence portfolio outcomes. Through academic research and real-world examples, they compare the narratives of disciplined investors and short-term speculators, offering a framework for bridging human behavior with market efficiency.
LINKS FROM TODAY'S EPISODE:
The Informed Investor: Feedback Survey
https://www.dimensional.com/us-en/informed-investor-survey
"The Informed Investor" on YouTube [update with live link]
Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts
Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/
Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-d-4105b98/
Scott Bosworth on LinkedIn https://www.linkedin.com/in/sbosworth/
Learn more at https://www.dimensional.com/
