The causes of poor decision making - investor psychology

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There are 9 distinct behaviors that tend to plague investors based on their personal experiences and unique personalities.

Loss Aversion
Expecting to find high returns with how risk

Narrow Framing
Making decisions without considering all implications

Mental Accounting
Taking undue risk in one area and avoiding rational risk in another

Diversification
Seeking to reduce risk, but simply using different sources

Herding
Copying the behavior of others even in the face of unfavorable outcomes

Regret
Treating errors of commission more seriously than errors of omission

Media Response
Tendency to react to news without reasonable examination

Optimism
Belief that good things happen to me and bad things happen to others

Anchoring
Relating to the familiar experiences, even when inappropriate

Key Findings 

In 2015, the 20-year annualized S&P return was 8.19% while the 20-year annualized return for the average equity mutual fund investor was only 4.67%, a gap of 3.52%.