MICHEL PIREU: Get to know yourself before making investing decisions
The reality is that your past behaviour does very often predict your future behaviour
“I have improved only in my ability to recognise situations in which errors are likely,” says Daniel Kahneman. Perhaps we should all settle for that.
Simply knowing that you’ll find it hard to put more money at risk in a crisis, even if it’s the right thing to do, is useful. As is knowing that you’re easily swayed by the opinion of others or that you can’t help fretting over a stock’s short-term performance. Anything that points to where you’re likely to make an investment error is useful. You especially want to make sure you’re not labouring under the wrong set of assumptions, for instance:..