Avoid the Unforced Investment Errors Even Billionaires Make

Decades as an investor and trader on Wall Street have taught me that market panics come and go. Geopolitics, inflation and profit warnings, among other variables, can make a mess of things — and the ensuing volatility often fuels our urge to make a decision, any decision. Especially the bad kind.

How investors respond to market turmoil is, of course, what behavioral finance is all about. And, just like in baseball, what you want to avoid are unforced errors, which have a tendency to contribute to long-term financial harm. There’s an endless assortment of ways to make mistakes that hurt your portfolio, though most fall into four broad categories: believing things that are not true; attempting to operate outside of your skill set; allowing your behavior to be driven by emotions; and failing to let time work for you.