Burton Markiel in his book “A Random Walk Down Wall Street” explained some of the typical irrational behaviors of individual investors. I found his explanation on behavioral finance is very useful, you should pay attention to these behaviors so they don’t rule your head and ruin your investment.
Overconfidence
Researches show people tend to be overconfident about their beliefs and abilities, and over-optimistic about the assessment of the future. In one experiment, they asked a group of people about their competence in driving skills to average drivers. Answers to this question showed a majority of participants think they drive better than average. This tendency is particularly strong among investors. Most investors overestimate their knowledge and underestimate the risks involved. They think they are better than average. If you think like this too, please think again.
Biased Judgment
A lot of investors think they can see trends or spot a stock-price pattern. Most of the time stock price movement is random and does not have specific trends or patterns. Be careful when you are attempting to make certain predictions.
Herding
In one study, the researcher put a single person on a street corner looking up at the sky for one minute. They observed only a few pedestrians on the street stopped to see what their person was looking at. Then they put five people to look at the sky together, this time four more times of pedestrians stopped. In the end, they put fifteen people to look at the sky, and almost half of the pedestrians stopped. People tend to follow the crowds, and investors do the same and chase popular ‘hot stock’ (e.g.Tesla).
Loss Aversion
Loss aversion refers to the behavior in that people make decisions to avoid loss, under the influence that losses are far more undesired than equivalent gains are desired. For example, if you earn $100 and you might feel pretty happy for a day; but if you lose $100 and you will feel much worse for an extended period. Be aware of this when you are making a certain investment decision.
Pride and Regret
The emotion of pride and regret also influence investor behavior. Investors usually find it very difficult for them to admit they made a mistake. So they might hold on to a losing position and hope it will eventually recover. If they sold at a loss, they would feel painful regrets. This a lot of times causes the investors to make irrational decisions.
伯顿·马基尔 (Burton Markiel) 在他的《华尔街漫游》一书中解释了个人投资者的一些典型的非理性行为。我发现这个关于投资心理的介绍非常有用，您应该注意这些行为，以免它们控制您的头脑并影响您的投资行为。
过度自信
研究表明，人们往往对自己的信念和能力过于自信，对未来的评估过于乐观。在一项实验中，研究者向一组人询问了他们自我评价自己和普通司机驾驶能力的比较。这个问题的答案表明，大多数参与者认为他们的驾驶水平高于平均水平。这种趋势也在投资者中尤为强烈。大多数投资者高估了他们的知识，低估了所涉及的风险。他们认为自己比普通投资者更会投资。如果你也有这样的想法，请三思。
判断偏差
许多投资者认为他们可以看到趋势或发现股票价格的变化秘密。事实上，大多数时候股价的变动是随机的，并没有特定的趋势或模式。当你试图做出某些预测时要小心。
羊群行为
在一项研究中，研究人员让一个人在街角仰望天空一分钟。他们观察到街上只有少数行人停下来看他们的人在看什么。然后他们让五个人一起看天，这次又有四个行人停下来。最后他们让十五个人看天，几乎有一半的行人都停下了脚步。人们倾向于随大流，投资者也一样，喜欢追逐流行的“热门股票”（例如特斯拉）。
厌恶损失
对于损失的厌恶是指人们对损失带来的痛苦比收益带来的快乐大的多，常常为避免损失而做出决定的行为。例如，如果你赚了100 美元，你可能会很高兴一天； 但是如果你损失了 100 美元，你会在很长一段时间内感觉更糟。 当您做出某些投资决定时，请注意这一点。
傲慢遗憾
骄傲和遗憾的情绪也会影响投资者的行为。投资者通常很难承认自己犯了错误。因此，他们可能会不愿放弃亏损的投资，并希望它能最终回本。如果他们亏本出售，他们会感到痛苦的遗憾。很多时候，这会导致投资者做出不合理的决定。
#behavioralfinance
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