oter

Sunk cost fallacy causes investors to throw good money after bad investments from "summary" of The Little Book of Behavioral Investing by James Montier

The sunk cost fallacy is a common cognitive bias that influences decision-making process of investors. This bias occurs when individuals continue to invest in a losing proposition simply because they have already committed resources to it. In other words, they are unwilling to cut their losses because they have already spent time, money, or effort on the investment. This irrational behavior is driven by the desire to recoup the initial investment, even when it is clear that the investment is not performing as expected. Investors fall victim to the sunk cost fallacy when they allow past decisions to cloud their judgment about the future prospects of an investment. Instead of objecti...
    Read More
    Continue reading the Microbook on the Oter App. You can also listen to the highlights by choosing micro or macro audio option on the app. Download now to keep learning!
    Similar Posts
    Mindfulness can help counteract brain tricks
    Mindfulness can help counteract brain tricks
    When our brains play tricks on us, it's easy to fall into patterns of thought that are not helpful or accurate. These tricks ca...
    Representativeness bias results in faulty judgments
    Representativeness bias results in faulty judgments
    Representativeness bias is a cognitive bias that leads investors to make judgments based on how closely an event or situation r...
    The Federal Reserve System is the central bank of the United States
    The Federal Reserve System is the central bank of the United States
    The Federal Reserve System plays a crucial role in the United States economy by serving as the country's central bank. As the c...
    Planning for financial emergencies is crucial
    Planning for financial emergencies is crucial
    The importance of preparing for unforeseen financial emergencies cannot be overstated. Life is unpredictable, and unexpected ex...
    Overcoming limiting beliefs around wealth
    Overcoming limiting beliefs around wealth
    The beliefs we hold about money can greatly impact our financial success. Limiting beliefs around wealth can hold us back from ...
    Seek out diverse perspectives and insights to inform your decisions
    Seek out diverse perspectives and insights to inform your decisions
    When making decisions, it is imperative to seek out diverse perspectives and insights. This entails looking beyond our own bias...
    Investing is more about behavior than numbers
    Investing is more about behavior than numbers
    Investing is a unique domain where numbers and calculations take precedence. Many people believe that success in investing is a...
    Understanding cognitive biases can improve decisionmaking
    Understanding cognitive biases can improve decisionmaking
    By recognizing and understanding the cognitive biases that influence our decision-making, we can ultimately improve our ability...
    Stay proactive in your financial education
    Stay proactive in your financial education
    Continuously seeking to expand your knowledge about financial matters is essential for long-term success in investing. It is no...
    Be aware of your risk tolerance and adjust your investments accordingly
    Be aware of your risk tolerance and adjust your investments accordingly
    Understanding your risk tolerance is a critical aspect of successful investing. It is essential to know how much risk you can c...
    oter

    The Little Book of Behavioral Investing

    James Montier

    Open in app
    Now you can listen to your microbooks on-the-go. Download the Oter App on your mobile device and continue making progress towards your goals, no matter where you are.