Friday, February 12, 2010

I Have Seen The Enemy, and It Is Me

Here is a good interview concerning behavioral finance and how it affects individual investors. The finance Professor who is interviewed, Terrance Odean, makes the argument that due to behavioral biases like over-confidence, individual investors who actively trade in their accounts make a mess of their portfolios.

His advice to people is:

"Generally speaking, you should buy and hold, invest for a long horizon, pay attention to your trading costs and taxes, and diversify"

I couldn't agree more!