It's been said of life that we are our own worst enemies, for the mindless decisions we make, as well as our frequent inability to learn from them. Nowhere is this more evident than on Wall Street, where this enemy from within has a way of making us too confident, too timid, too impulsive, and too staid - sometimes even all at once.
And so, for this installment of Investing 101, we highlight four key areas where your head can be the biggest obstacle to success as we tackle some dos and don'ts of market psychology.
Anchored in the Past
Oh how easy it is to pick winners with the benefit of hindsight. And yet, one of the biggest blunders investors make is the tendency to make decisions in the rear-view mirror instead of the through the windshield.
"There's always some big recent event that everyone anchors themselves on," says Russell Pearlman, sr. markets editor at SmartMoney magazine in the attached video. "These days everyone is anchored on all the bad stuff that happened in 2008."Read More »from Investing 101: The 4 Most Common Psychological Traps