Stories | March 31, 2010

Dear diary

Keeping an investment diary could help stop repeat bad investments

Behavioural economists tell us people naturally block out bad memories - and this could have costly implications for investors.

Investors should consider keeping a diary of the ups and downs of their investments, writes Financial Times columnist John Authers.

We're emotional
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".

Selective thinking
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. 

eZonomics team
.(JavaScript must be enabled to view this email address)

InvestingEmotionBiasGoal setting

Have your say

Have you kept your New Year 2016 money resolutions?