Evidence-Based investing comes from a compilation over more than a half century of many independent peer reviewed research results of how markets work. There are 12 key insights.
Here are the last two insights on behavior:
11. The human factor is the most important of all the factors. YOU are only human! Our basic instincts cause more harm than good while investing.
12. There are a wide range of biases causing us to react irrationally (why the evidence based approach is designed to counter them). What are common biases? There are many!
PS. Analogies that explain the difference between investing and planning (Yes, they are different)! :
- Investing is the fuel for your plan – it is not the plan itself.
- Investing are the cables that support your bridge which is the plan that gets you where you are to where you want to get to.
This blog is not a solicitation; simply an explanation of the basic philosophy and approach.