Investor Behavior

Updated 3 years ago

Investor behavior is often counterproductive to your goals at least according to research. We’re not all that rational according to the evidence when making investment decisions. We tend to fall into ‘predictable patterns of destructive behavior.”The Security and Exchange Commission compiled a white paper highlighting some of the most common mistakes investors make.Sell winning positions – I haven’t seen this as typical investor behavior that this and the next behavior according to the researchers, occur with investors who frequently check their investments.Hold loosing positions- This I have seen. I would say it is common of some types of investor. I am usually suggesting we get rid of the very poor performing asset and the investor just doesn’t want to do it. And they hold on to it, in my experience, for many years, well after there was reason to hope.Fail to invest- the research indicates that the reason is typically financial illiteracy. There is a strong connection to how well you understand the market and your willingness to invest. Manias and panics- financial mania according to the research is ‘rapid rise’ in value of an investment reflecting the enthusiasm of the multitude for this asset. A panic is the subsequent fall when this bubble bursts. This mood is a spreading of emotional certainty that this asset and it’s behavior is very different than any others, that it’s assent is certain to continue, that everyone in the know is buying this asset. This white paper cites the dt-com and housing bubbles as recent examples. Citation:http://www.sec.gov/investor/locinvestorbehaviorreport.pdfMarion R. Syversen, MBA – PresidentNorumbegaFinancial207.862.2952Marion@NorumbegaFinancial.com Check out our website that includes weekly streaming videosWWW.NorumbegaFinancial.com Vote Norumbega Financial for Bangor’s Best Financial Planning Firm at Market Surveys of America Disclosure:Only securities and advisory services offered through Wall Street Financial Group, Inc. Registered Investment Advisor. Member FINRA/SIPC. Wall Street Financial Group, Inc., Norumbega Financial and all other entities listed herein are separate entities, independently owned and operated.


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