Economics is usually considered the stuff of mathematicians who love money. The “dismal science” has no place for political science or psychology, or at least they did not have a place for most of the discipline’s history. That has begun to change, and psychology is giving us some important insight into the way investors behave. Behavioral finance may help us understand price movements and give us an edge in the future, but for now, it is most useful in helping us see our own faults and formulating a plan for how to prevent damage to our portfolio caused by our own bad decisions.
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Last Updated: 6/25/2018