“Seven Sins” of money management

• The brain is hardwired to like short-term gratification (leading to quick and easy decisions).
• We tend to dislike social-exclusion behaviour (leading to herd-like decisions).
• Overall, despite our hopes/beliefs that we are logical decision makers, these innate tendencies often cause less-than-rational decisions.

“Seven Sins” of money management:

1. Enormous evidence shows investors are hopeless at forecasting, yet it may be at the heart of their investment process.
2. Investors are obsessed with information, yet more information doesn’t lead to better decisions, just overconfidence.
3. Meetings with company management are overrated; management themselves are likely highly biased.
4. Investors typically think they can outsmart everyone else.
5. Investors are (increasingly) obsessed with short-term time horizons.
6. People like good stories and often enhance them to suit their own biases, while ignoring the boring facts.
7. The mind’s default tendency is to believe; innate scepticism is rare, yet advantageous in investing.