The Biases That Cost You Money

Your brain is wired to be a terrible investor

Loss aversion

2x

losses hurt 2x more than gains feel good

Avg investor 2024

+16.5%

vs S&P 500 +25.0%

Behavior gap

~8.5%

cost of bad decisions

Disposition Effect

Selling winners too early to 'lock in' gains

Holding losers hoping they'll recover

Costs investors 3-6%/yr in returns

The #1 behavior that destroys portfolios

Anchoring

Fixating on the price you paid

'I'll sell when it gets back to my entry'

The stock doesn't know your cost basis

The only question: would you buy it today?

DALBAR's 2025 study found that the average equity investor earned 16.5% in 2024 while the S&P 500 returned 25%. That 8.5% gap is pure behavior: panic selling, late buying, and chasing trends. This pattern has repeated for 15 straight years.

the real enemy

The market's average return is ~10%/yr. The average investor's return is ~7%/yr. The 3% difference over 30 years means retiring with half the money. Your biggest risk isn't the market. It's yourself.

Check yourself

What is the 'disposition effect'?