• / Free eNewsletters & Magazine
  • / My Account
Home>Practice Management>Practice Builder>The 5 Biases of Independent-Minded Investors

Related Content

  1. Videos
  2. Articles
  1. Traps in Building Wealth for Retirement

    Morningstar's David Blanchett examines how aversion to save while younger, fear of loss, performance-chasing, and high ownership in employer stock are problematic areas for retirement accumulators.

  2. Higher Mortgage Rates Not a Death Knell for Homebuyers

    Despite a recent rise, lending rates remain near historic lows, says real estate expert Ilyce Glink, who also offers guidance on credit scores and encourages homesellers to be realistic in their expectations.

  3. Marks Takes the Market's Temperature

    For several years, investors have been acting bullish (if not thinking bullish) in bonds, bidding up safe instruments, while the interest in equities is still modest, with the potential for more relative value, says Oaktree's Howard Marks.

  4. Retirees: Learn From the Recent Bond Turbulence

    How investors can use the recent interest-rate-driven disruption as a stress-test for their portfolios. Plus, a new retirement income tool and some good news on prescription-drug costs.

The 5 Biases of Independent-Minded Investors

Overemphasizing data that confirms your beliefs and over-reliance on readily available information top the list.

Michael M. Pompian, 09/18/2014

This month's article is the ninth in a series called "Deep Dives Into Behavioral Investor Types." This series is intended to help advisors create better relationships with their clients by deeply understanding the type of person they are dealing with from a financial perspective and being able to adjust their advisory approach to each type of client.

As we learned in the last series, there are four behavioral investor types, or BITs: the Preserver, the Follower, the Independent, and the Accumulator. As noted in previous articles, the learning process for each BIT will be a series of three articles:

1. Part I will be a diagnosis of each BIT and discussion of its general characteristics.

2. Part II will be a deep dive into the biases of each BIT.

3. Part III will be how to create a portfolio for each BIT.

This article is Part II of the Independent BIT.

 

As previously reviewed, the biases of Independents tend to be cognitive--relating to how people think--rather than focusing on emotional aspects--relating to how they feel. The biases of the Independent BIT are confirmation, availability, self-attribution, conservatism, and representativeness.

The author is a freelance contributor to MorningstarAdvisor.com. The views expressed in this article may or may not reflect the views of Morningstar.

blog comments powered by Disqus
Upcoming Events
Conferences
Webinars

©2014 Morningstar Advisor. All right reserved.