Loss aversion bias<\/strong> describes the tendency to fear losses more than to celebrate gains. For example, you may experience joy at the chance of becoming $5,000 richer, but the fear of losing $5,000 might provoke a far greater anxiety, causing you to take on less investment risk than might be necessary to pursue your goals.<\/p>\n The endowment effect<\/strong> is similar to anchoring in that it encourages you to \u201cendow\u201d what you currently own with a greater value than other possibilities. You may presume the investments in your portfolio are of higher quality than other available alternatives, simply because you own them.<\/p>\n Overconfidence<\/strong> is having so much confidence in your own ability to select investments that you might discount warning signals or the perspective of more experienced professionals.<\/p>\n Confirmation bias is the tendency to assign more authority to opinions that agree with your own. For example, you might give more credence to an analyst report that favors a stock you recently purchased, in spite of several other reports indicating a neutral or negative outlook.<\/p>\n The bandwagon effect<\/strong>, also known as herd behavior<\/strong>, happens when decisions are made simply because \u201ceveryone else is doing it.\u201d This can result in buying high and selling low \u2014 what most knowledgeable investors strive to avoid.<\/p>\n Emotion-based decisions can have a significant impact on your portfolio over time. Consider how much a long-term investor might have lost by shifting in and out of the market due to fear, overconfidence, or following the herd, and subsequently missing the best-performing days over the 10-year period ended 2023.<\/p>\n Growth of $10,000 initial investment, with average annual return, 2014\u20132023<\/strong><\/p>\n Recency bias<\/strong> refers to the fact that recent events can have a stronger influence on your decisions than those in the past. For example, if you were severely affected by market gyrations in the early days of the pandemic, you may have wanted to sell your stock holdings due to fear. Conversely, if you were encouraged by the stock market\u2019s strong performance in 2023, you may have wanted to pour all your money into equities. Yet either of these actions might not have been appropriate for your investment goals and personal circumstances.<\/p>\n When it comes to our finances, instincts may work against us. Before taking any actions with your portfolio, it might be wise to seek the counsel of a qualified financial professional who can help you identify any unconscious biases at work.<\/p>\n All investing involves risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful. There is no assurance that working with a financial professional will improve investment results.<\/em><\/p>\n This information is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek guidance from an independent tax or legal professional. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. \u00a9 2024 Broadridge Financial Solutions, Inc.<\/p>\n","protected":false},"featured_media":1280,"template":"","meta":{"_acf_changed":false},"newsletter-category":[27],"class_list":["post-1279","newsletter","type-newsletter","status-publish","has-post-thumbnail","hentry","newsletter-category-june"],"acf":[],"yoast_head":"\n
\nRisk of Missing Out<\/h2>\n
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\nAn objective view can help<\/h2>\n