“Never trust anyone over 30,” we were told in the turbulent 1960s. In the still turbulent 2020s, investors might tweak that suggestion to warn against trusting our emotions, regardless of age.
Research has shown that the fear of short-term losses is a strong impediment to long-term investment performance. It’s what behavioral economists call “myopic risk aversion.” [1]
Here’s how it works.
Despite seemingly random day-to-day fluctuations, stock prices generally anticipate by several…
