The 5 common behavioral biases that can influence investment decision-making

The biggest threat to your portfolio may not be the market. It could be the story your brain is telling you.

In this episode of Life With Mikey, we explore five common behavioral biases that can influence investment decision-making. Using historical examples including investor behavior during periods of heightened interest in cryptocurrencies and real estate markets between 2020 and 2022, we examine how cognitive biases can affect financial decisions. You'll learn practical self-assessment frameworks used in behavioral finance to help evaluate your own decision-making process, including a reflective question that can help you reassess whether certain holdings continue to align with your investment objectives, risk tolerance, and overall strategy.

In this episode:

• The story trap that moved money into crypto

• Why the people fall for confirmation bias

• The coffee mug experiment

• The client who couldn't sell his Facebook stock

• The three assumptions that broke real estate deals

• Cows, sharks, and why headlines may influence your risk radar

Chapters

0:50 - The Story Trap That Moves Money

3:22 - "Real Estate Always Goes Up" — Remember?

6:15 - Is Your Brain Defending Its Own Lies?

9:33 - The Algorithm May Impact Your Research

12:35 - The Coffee Mug That Explains Your Portfolio

14:47 - The Client Who Wouldn't Sell Facebook

17:55 - The Bias That Broke Deals

22:18 - Write the Failure While you Evaluate Your Investment

23:37 - Cows, Sharks, and Your Risk Radar