Protecting your portfolio from poor thinking

It is a fact of human nature that we all suffer from cognitive biases to some extent; if you think you’re the exception to this rule, you could be suffering from overconfidence bias. “We are, as human beings, wired in a way that is quite detrimental to good investing,” says Romano Sala Tenna from Katana Asset Management. One of the factors separating great investors from average investors is their ability to recognise and control their emotions and biases. “I actually think you can make money out of the stock market if you understand it really well, without ever looking at a financial statement,” says Steve Johnson from Forager Funds. In this thematic discussion, they identify some of the most significant and dangerous biases for investors and discuss how to go about protecting yourself against the worst effects.

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