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The Psychology of Investing: Why We Make Bad Money Decisions
Andy opens with a confession: industrial psychology taught him that job interviews are terrible predictors of success. That same human irrationality shows up everywhere, especially in investing.
The hosts walk through seven behavioral biases that trip up even professional investors. From overconfidence after hitting it big on Nvidia to confirmation bias keeping us stuck in echo chambers, these mental shortcuts cost real money.
Plus, they tease next week's estate planning episode on trusts.
We cover:
- Why overconfidence peaks when you know just enough to be dangerous
- How confirmation bias creates cognitive dissonance with market realities
- Loss aversion and why losses hurt 2.5x more than gains feel good
- Recency bias making inflation feel scarier than it actually is
- The anchoring trap of waiting for stocks to "get back" to your purchase price
- FOMO and herd mentality driving meme stock mania
- Home country bias leaving 35% of global opportunities on the table
- Practical strategies to counteract each bias
⏱️ Timestamps:
- (00:32) Why interviews predict job success poorly
- (05:02) Behavioral finance 1.0 vs 2.0
- (07:48) Overconfidence bias and the knowledge curve
- (12:22) Confirmation bias and political echo chambers
- (17:00) Loss aversion: why losses hurt 2.5x more
- (19:56) The Yellowstone bear attack and recency bias
- (24:07) Anchoring to purchase prices
- (26:25) FOMO and meme stock mania
- (29:03) Home country bias: missing 35% of opportunities
- (33:52) Next week: When should you open a trust?
- (34:20) Podcast disclosures
Resources:
Follow Burney Wealth Management on LinkedIn
Follow Adam Newman on Linkedin
Follow Andy Pratt on LinkedIn
#BehavioralFinance #InvestmentPsychology #InvestorBiases #WealthManagement #FinancialPlanning
The Burney Company is an SEC-registered investment adviser. Burney Wealth Management is a division of the Burney Company. Registration with the SEC or any state securities authority does not imply that Burney Company or any of its principals or employees possesses a particular level of skill or training in the investment advisory business or any other business. This content is for informational and educational purposes only. It is not intended as personalized investment advice or a recommendation.
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By Burney Wealth ManagementAndy opens with a confession: industrial psychology taught him that job interviews are terrible predictors of success. That same human irrationality shows up everywhere, especially in investing.
The hosts walk through seven behavioral biases that trip up even professional investors. From overconfidence after hitting it big on Nvidia to confirmation bias keeping us stuck in echo chambers, these mental shortcuts cost real money.
Plus, they tease next week's estate planning episode on trusts.
We cover:
- Why overconfidence peaks when you know just enough to be dangerous
- How confirmation bias creates cognitive dissonance with market realities
- Loss aversion and why losses hurt 2.5x more than gains feel good
- Recency bias making inflation feel scarier than it actually is
- The anchoring trap of waiting for stocks to "get back" to your purchase price
- FOMO and herd mentality driving meme stock mania
- Home country bias leaving 35% of global opportunities on the table
- Practical strategies to counteract each bias
⏱️ Timestamps:
- (00:32) Why interviews predict job success poorly
- (05:02) Behavioral finance 1.0 vs 2.0
- (07:48) Overconfidence bias and the knowledge curve
- (12:22) Confirmation bias and political echo chambers
- (17:00) Loss aversion: why losses hurt 2.5x more
- (19:56) The Yellowstone bear attack and recency bias
- (24:07) Anchoring to purchase prices
- (26:25) FOMO and meme stock mania
- (29:03) Home country bias: missing 35% of opportunities
- (33:52) Next week: When should you open a trust?
- (34:20) Podcast disclosures
Resources:
Follow Burney Wealth Management on LinkedIn
Follow Adam Newman on Linkedin
Follow Andy Pratt on LinkedIn
#BehavioralFinance #InvestmentPsychology #InvestorBiases #WealthManagement #FinancialPlanning
The Burney Company is an SEC-registered investment adviser. Burney Wealth Management is a division of the Burney Company. Registration with the SEC or any state securities authority does not imply that Burney Company or any of its principals or employees possesses a particular level of skill or training in the investment advisory business or any other business. This content is for informational and educational purposes only. It is not intended as personalized investment advice or a recommendation.