James Montier, an analyst with a behavioral finance edge, offers:
“Leaving the trees could have been our first mistake. Our minds are suited for solving problems related to our survival, rather than being optimised for investment decisions. We all make mistakes when we make decisions. Avoiding the most common investment mental pitfalls:
1 – You know less than you think you do.
2 – Be less certain in your views, aim for timid forecasts and bold choices.
3 – Listen to those who don’t agree with you.
4 – You didn’t know it all along, you just think you did.
5 – Don’t take information at face value, think carefully about how it was presented to you.
6 – Vivid, easy to recall events are less likely than you think they are, subtle causes are underestimated.”