Long-term investing can help counter investors’ behavioural biases

Capital Group
By December 18, 2018 10:00

Long-term investing can help counter investors’ behavioural biases

Long-term investing

What is the main problem facing the investor today? Some might say less accommodating central bank policies. Others could point to where we are in the economic cycle. While those are very valid issues, all too often, as the founder of modern security analysis Benjamin Graham once said, “The investor’s chief problem – and even his worst enemy – is likely to be himself.” Investor behaviour can appear to defy all logic and reason. Why? According to research in behavioural finance, most investors are not strictly rational. Rather, they are subject to behavioural biases; past experiences, personal beliefs and preferences can influence judgment and skew decisions. These biases can steer them away from logical, long-term thinking, and deter them from reaching their long-term investment goals. In this report, we study two common behavioural biases: loss aversion and herd mentality. We examine their impact on investment returns and consider how long-term investing can help mitigate these biases and produce positive investment outcomes. 

Asset Manager

Capital Group is one of the largest and most experienced investment management companies in the world

Capital Group is in 1931 opgericht in de Verenigde Staten en een van de grootste onafhankelijke vermogensbeheerders ter wereld met een actief beheerd vermogen van meer dan $2,1 biljoen. We doen alleen vermogensbeheer. Al 90 jaar is het ons primaire doel om een consistent en superieur resultaat te realiseren voor langetermijnbeleggers.

Website:capitalgroup.com

Feike Goudsmit
Managing Director, Institutional
Tel: +31 (0) 20 797 7575
E-mail: feike.goudsmit@capitalgroup.com

LinkedIn: capital-group-europe

Capital Group
By December 18, 2018 10:00

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