By James E. Wilson via

Most books about investing focus on corporate finance or economics. While these are important, investing is mostly about behavior and how this impacts your money decisions.

Stay Seated, Class

Think back to grade school (a long time ago I know), and how the teacher kept telling you and your classmates to “behave and stay in your seats.” Well, good investment behavior is exactly the same: Stay the course. All the emphasis on global diversification and low costs go right out the window when bad behavior rears its head.

While company earnings and economic growth are obvious and visible, investor behavior is mostly silent. It lurks in the background.

As the work by Professor Dan Ariely, a Duke University neuroeconomist, and others have shown, we often make mistakes in a predictable, repeatable fashion. But this mistake pattern is mostly unrecognizable to us.  This makes trying to solve behavior problems all the more challenging.

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