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Why Emotional People Make Bad Investors

This explains why humans are naturally hardwired to make bad investment decisions.

“When we enjoy a gain of a dollar and the loss of a dollar which are, of course, symmetrical, we tend to suffer two to two and a half times more from the loss then we enjoy the gain,” says Michael Mauboussin, Chief Investment Strategist at Legg Mason Capital Management.

Source

Michael Mauboussin is the author of More More Than You Know: Finding Financial Wisdom in Unconventional Places and more recently, Think Twice: Harnessing the Power of Counterintuition.