Emotions drive investor behavior more than logic from "summary" of The Little Book of Behavioral Investing by James Montier
Investors are often under the illusion that they make decisions based on careful analysis and rational thought. However, the reality is quite different. Emotions play a much larger role in driving investor behavior than logic. This can be seen in the way that investors tend to follow the herd, buying when everyone else is buying and selling when everyone else is selling. This herd mentality is driven by emotions such as fear and greed, rather than a logical assessment of the facts. One of the key emotions that drives investor behavior is fear. When investors are gripped by fear, they tend to panic and make hasty decisions that are not based on sound reasoning. This can lead to a herd mentality, where everyone rushes to sell their investments at the same time, causing prices to plummet. Similarly, when investors are driven by greed, they may become overconfident and take excessive risks in the hope of making a quick profit. This can lead to bubbles in the market, where prices become detached...
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