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Recency bias—the tendency to give too much weight to recent experience and ignore long-term historical evidence—underlies many of the mistakes commonly made by investors. It’s particularly dangerous because it causes investors to buy after periods of strong performance (when valuations are high and expected returns low) and sell after periods of poor performance (when valuations are low and expected returns high).
Recency can lead even investors with well-developed plans to abandon them. And it can also lead to other mistakes, such as overconfidence and the penchant to > SEE MORE
As the director of research for the BAM Alliance, it’s not surprising that I’ve been getting lots of calls lately about investing in bitcoin. Just seven years ago, bitcoins were trading at about 10 cents. Four years ago, their value had jumped to about $125. About a year ago, their value had reached about $600.
On Wednesday, Nov. 29, 2017, their price had risen to more than $11,150. Then, by the following morning, it had fallen to about $9,100, a drop of almost 20% in less than 24 hours. By that evening, they were again trading at about $10,000.
Prices continued to climb, north of $10,500, early Friday, possibly on news that a new bitcoin futures contract received regulatory approval. Nothing attracts the attention of the public like the possibility of missing out on the latest craze. Regret > SEE MORE
Demystifying Planning & Paying for College: A MoneyZen Conversation with Wealth Advisor David Ressner
Demystify planning for college costs: Manisha Thakor and David Ressner discuss saving for college, financial aid, calculating costs and even how to identify the right (priced) college.
Manisha Thakor is the Director of Wealth Strategies for Women at the BAM Alliance.
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