Investing Psychology: A Journey Into the Investor's Mind
I’ve spent over 20 years in IT and a lot of time looking at charts and numbers. One thing I’ve learned is that the math is often the easy part. The hard part is the gray matter between your ears.
I’m starting a new series where I’ll be retelling Tim Richards’ book, “Investing Psychology: The Effects of Behavioral Finance on Investment Choice and Bias” (ISBN: 978-1-118-72219-0). It’s a bit of a mouthful, but the ideas inside are gold.
The core message is simple: your brain wasn’t built for the stock market. It was built to keep you from getting eaten by tigers. And while that’s great for staying alive, it’s terrible for your portfolio.
In this series, I’ll go through the book chapter by chapter. We’ll look at why we see patterns where they don’t exist, why we follow the herd, and how we can try to fix our own mental glitches.
If you’ve ever wondered why you bought at the top or sold at the bottom, this series is for you. We’re going to meet the enemy: our own brains.
I’ll be posting one update every day until the end of the month. Stick around if you want to stop being your own worst financial enemy.