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Investing Specialists

Key Behavioral Traps and How to Avoid Them

Morningstar readers weigh in on which behavioral mistakes have hobbled their results and how they've fought back.


Psychological factors--such as the tendency to feel particularly risk-averse following a bear market or a proclivity to follow the crowd--can play enormous roles in our investment outcomes, and often they are not a positive ones. focused on behavioral-finance factors in our "Inside the Investor's Mind" special report this past week, in which Morningstar analysts and expert theorists offered insights on helping investors identify, correct, and even profit from the most common behavioral pitfalls.

To help kick things off, I asked Discuss forum participants to do a little soul-searching. Had psychological factors, rather than a calculated assessment of investment considerations, driven their financial decisions in the past? I also asked whether they had any successful methods for combating those behavioral traps.

Christine Benz does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.