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In normal down markets, it’s usually easy to see why diversification matters. But in the current environment, shaped by rapidly rising interest rates, we’re seeing both stocks and bonds underperform. No matter how many historical precedents argue against the inclination, it’s easy to want to uproot one’s current portfolio. Read more to understand why that’s generally not a good idea.
Read MoreWhen evaluating our investments, behavioral finance offers insight into why we often stick with the status quo. Even when underperforming, many investors, including sophisticated ones, tend to stick with strategies that are too risky, too expensive, or too often try to time the market. Read our latest blog post about how the Endowment Effect and self-efficacy affect everyday investment decisions.
Read MoreThe behavioral biases that cause us to ignore overwhelming odds and fill out March Madness brackets are innate. They’re also the same traits that lead to illogical investment decisions. Learn more about how the Affect Heuristic and the Illusion of Validity influence our investment decisions in the same way they make us cheer on underdogs, and root for teams we may have never followed before.
Read MoreWhile some LPs may applaud Sequoia’s move to consolidate investments into an open-ended vehicle, blurring the lines between what makes a private market and public market manager successful may only lead to disappointing results.
Read MoreThe hype around GameStop and r/WallStreetBets may have a hint of deja vu for those who were trading stocks in the late 90s. Fortunately, behavioral finance provides valuable insight into why history seems to be repeating itself and why NextGen day traders may not be so different than those professional investors on Wall Street they’re determined to beat.
Read MoreHow secure we feel in our relationships tends to mirror how secure we feel about our finances. Loss aversion is deeply ingrained within our brains, and brings challenges to our relationships. The work of Nobel Laureate Daniel Kahneman sheds light on this dilemma.
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