The field of behavioral finance has provided us with fascinating insights into how our behaviors as human beings impacts investment results.
Using a database of tens of thousands of brokerage records of U.S. individual investors, the authors examined the effect of behavioral biases on the mutual fund choices of a large sample of U.S. discount brokerage investors.
Their basic conclusion was that behaviorally biased investors typically make poor decisions about fund style and expenses, trading frequency and timing — resulting in poor performance.
The following is a summary of their conclusions:
Via Alessandro De Angelis