Investing Psychology Chapter 2: The Pain of Losing (Part 2)
Picking up from where we left off in Chapter 2. We’ve established that we’re all overconfident. Now let’s look at how that overconfidence turns into specific, expensive mistakes.
Loss aversion
Loss Aversion Bias: Why Losing $100 Hurts More Than Gaining $200 Feels Good
We are now entering Part 4 of Michael Pompian’s book, and this is where things get really interesting. We are moving from cognitive biases (errors in thinking) to emotional biases. And the first one is a big one.
Introduction to Behavioral Biases: Why Your Brain Sabotages Your Portfolio
Chapter 3 of Pompian’s book is short but important. It is the setup chapter. Before getting into 20 specific biases over the next 20 chapters, he wants you to understand what biases are, why they matter, and how they break down into categories.
Your Brain Is Bad at Investing: Behavioral Finance
Up to this point in the book, Malkiel has described theories built on a simple assumption: investors are rational. They weigh risks, calculate value, and make sensible decisions. Chapter 10 throws all of that out the window. Because here’s the thing. People are not rational. And two psychologists, Daniel Kahneman and Amos Tversky, spent decades proving it.
Behavioral Biases Part 2 - Emotions and Debiasing
This is a retelling of Chapter 2 (second half) from “Behavioral Finance for Private Banking” by Thorsten Hens, Enrico G. De Giorgi, and Kremena K. Bachmann (Wiley, 2018).
Investing Psychology Chapter 2: Overconfidence, Loss Aversion, and Your Ego
Chapter 2 of Tim Richards’ book is called “Self-Image and Self-Worth.” And the title tells you everything. This chapter is about how your ego quietly destroys your investment returns.