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Don't Fall for a Good Story

Daniel Sotiroff (daniel.sotiroff@morningstar.com)

A version of this article was published in the December 2018 issue of Morningstar ETFInvestor. Download a complimentary copy of Morningstar ETFInvestor by visiting the website. Simple, compelling stories tap into our emotions, hijack our ability to think rationally, and persuade us to pursue investments that are unlikely to perform well. The South Sea Company of early 18th century England exemplifies how a well-spun narrative can cause investors to ignore facts and disrupt their ability to make sound investment decisions.