The stock market will move up.
The stock market will move down.
I will think the market’s going to go up, and it will actually go down.
I will think the market’s going to go down, and it will actually go up.
I will think the market will go up or down, and it will actually go sideways. Frustrating.
I will see a short-term price movement in a stock and start questioning my long-term investment thesis.
I will decide I’m bullish and then look for evidence to support that bullish thesis.
I will decide I’m bearish and ignore most bullish evidence, so I don’t disrupt my preconceived point of view.
I will chase performance even though I know that’s not a good way to invest.
I will anchor to a specific price point then make irrational decisions because of that mental anchor.
I will hold a losing position way too long and ignore the advice, “All large losses begin as small losses.”
I will sell a winning position way too early and leave plenty of alpha on the table.
I will hear an investment idea from a friend/colleague/guest speaker/talking head/market expert and take action without making my own evaluation of the evidence.
I will start the year with a sound and well-articulated investment plan, then make day-to-day decisions that are not in line with that plan.
In short, I will be an imperfect investor.
Just remember, an imperfect investor is an honest investor.
Learn more about my research over at Sierra Alpha.
Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.