Course 507:
Behavioral Pitfalls, Part 1
In this course
1 Introduction
2 Pitfall: Overconfidence
3 Pitfall: Selective Memory
4 Pitfall: Self-Handicapping
5 Pitfall: Loss Aversion
6 Pitfall: Sunk Costs

Successful investing is hard, but it doesn't require genius. In fact, Warren Buffett asserted that it's not so much raw brain power you need, but temperament "to control the urges that get other people into trouble in investing."

As much as anything else, successful investing requires something perhaps even more rare: the ability to identify and overcome one's own psychological weaknesses.

Over the past several decades, psychology has permeated our culture in many ways. In more recent times, its influences have taken hold in the field of behavioral finance, spawning an array of academic papers and learned tomes that attempt to explain why people make financial decisions that are contrary to their own interests.

Experts in the field of behavioral finance have a lot to offer in terms of understanding psychology and the behaviors of investors, particularly the mistakes that they make. Much of the field attempts to extrapolate larger, macro trends of influence, such as how human behavior might move the market.

This course and Portfolio 508 will focus on how the insights from the field of behavioral finance can benefit individual investors – specifically, how investors can learn to spot and correct investing mistakes in order to yield greater profits.

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