Investors should consider keeping a diary of the ups and downs of their investments, writes Financial Times columnist John Authers.
Behavioural economists tell us people naturally block out bad memories in favour of good ones. Authers writes the same holds true for investments and that "markets fall prey to wide swings of emotion".
Just at we can fall into thinking traps of overconfience, confirmation bias and more when investing, emotions can play tricks on memories too. Keeping an investment diary means writing down the loses as well as the wins and aims to stop people forgetting times investments did not work out. This, in turn, aims to limit the likelihood of repeating bad investments. The full article is available online for FT.com subscribers.