For our next meeting we were fortunate to have guest speaker, Brigitte Madrian Professor at Harvard Kennedy School, speak to us about common mistakes investors make. She was passionate about the research that she and others have done. Here they are:
Mistake #1 Naive diversification (thinking they are diverse, but they are not)
Mistake #2 The Disposition Effect (being reluctant to realize losses)
Mistake #3 Trading too much and the wrong stocks (returns chasing - the stocks people buy have lower future returns than the stocks people sell)
Mistake #4 Investors trust the familiar (home bias and employer stock)
Mistake #5 Investors make portfolio decisions in isolation (they do not take into account asset allocation in their employer match account when making the choices for their own contributions
Mistake #6 Investors pay too little attention to fees (either don't read or don't understand the fund prospectuses)
For our March meeting we will hear from very successful wealth adviser, Wyatt Larsen. He will talk about wealth management, risk management and the current investment climate.
