Behavioral Finance

There is a category of investing problems that no amount of stock-picking skill can fix: the human one. Loss aversion, confirmation bias, sunk cost fallacy, recency bias, narrative fallacy, and overconfidence systematically distort the decisions retail investors make during stretches that matter most — drawdowns, post-hoc analyses of losses, decisions about when to add or trim. The performance penalty across these biases, measured across decades of trading records, is enormous.

This cluster names the major biases, describes how they show up in real portfolio decisions, and walks through the procedural defenses that actually work. The defense is rarely motivational. It is structural — predetermined rules, position-size caps, scheduled rebalances, documented theses you can revisit when emotions take over.