Common Investment Foibles

the most common investment foible is known as the legacy bias meaning the assumption that, given that a stock’s performance has increase by 20% it is the right time to invest on the assumption that this performance will be duplicated in the near future. on the contrary, stocks that peak at about 15%-20% above a baseline performance tend to fall as investors sell-off to reap the windfall profits. this bias has also been noticed in real estate and other sectors. even doctors have been known to exhibit this bias when investing in hot commodities like real estate that soon peter out.

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