Investing bonus

You've heard it before and I hope that you have seriously considered it.

Investor success is impacted more by behavior than it is "technical know-how".

The 2014 Dalbar report shows that over the last 20 years the average investor earns 5.0% compared to the S&P500 return of 9.2%. The difference is completely attributable to investor behavior. For the record, the Dalbar report (not a quick read) can be found here.

In February of last year an interesting 4-page paper "How Biases Affect Investor Behaviour" was published in the European Financial Review. Click here for the paper.

The paper describes several common behavioral biases and suggests ways to mitigate the impact.The biases covered in the article (pretty quick read) are representativeness, regret aversion, disposition effect, familiarity bias, worry, anchoring, self-attribution bias and trend-chasing bias.