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October 13, 2015 | Weekly Commentary

When it comes to money and investing, we’re not always as rational as we think we are – which is why there’s a whole field of study that explains our sometimes-strange behavior. Where do you, as an investor, fit in? Insight into the theory and findings of behavioral finance may help you answer this question.

One bias we harbor is sometimes described as “availability bias”. In this case, investors overstate the probabilities of recently observed or experienced events because the memory is fresh. Recent news is capable of clouding investors’ perspective even if its effects are minor or inconsequential.

FOR THE TIME BEING, WE RECOMMEND YOU KEEP AN EYE ON THE “HEAT MAP” (BELOW) WHICH SERVES AS AN EXCELLENT TOOL TO KEEP THINGS IN PERSPECTIVE OVER A LONGER PERIOD.

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