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How to conquer top 25 financial biases

January 16th, 2020
How to conquer top 25 financial biases
This book describes the biases most relevant to investing, include background on how biases develop, and offer practical strategies to help you to improve your performance. Credit: Business Express Press

People can be remarkably irrational in the complex setting of financial markets. This can lead to catastrophic mistakes costing millions of dollars, according to a new book co-authored by Dr. Daniel Krawczyk, deputy director of Center for BrainHealth and Francis Chair professor in Behavioral and Brain Sciences at The University of Texas at Dallas, and George H. Baxter, CEO and portfolio manager at Sabrepoint Capital Management.

Based on cognitive brain science, including published research from Center for BrainHealth, Understanding Behavioral BIA$: A Guide to Improving Financial Decision-Making identifies the 25 financial biases most relevant to investing, which typically result from a limited understanding about how to leverage our attention, memory and knowledge. The authors describe recently discovered evidence of how biases develop and offer practical strategies to help investors implement personal and institutional best practices that guard against biases' harmful effects.

Tips included in the strategies to conquer investing biases include:

  • Rules-Based Investment Process
  • Active Management
  • Awareness of Uncertainty and Error
  • Group Decision Making
  • Idea Generation Process
  • Techniques for Analysis
  • Playbook for Constant Improvement

"The science is clear: our brains are adaptable and trainable. In practical terms, this means that once we identify biases and understand them, we can learn to protect our brains against these biases and adopt strategies that strengthen our performance rather than hinder it," said Krawczyk.

Provided by Center for BrainHealth

Citation: How to conquer top 25 financial biases (2020, January 16) retrieved 29 March 2024 from https://sciencex.com/wire-news/340602824/how-to-conquer-top-25-financial-biases.html
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