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Investment Psychology

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The Seven Faces of Valued Advice

What is the value of great advice?

For advisers who have perceived their value to clients as the ability to deliver positive returns year after year or be accurate forecasters of markets, they will be finding it hard to enunciate their value proposition in this complex age we live in.

Saying No

How do you break a bad investment habit?

Bad investment habits are the norm, not the exception. They include panicking and bailing out at generational market lows, like what too many did in 2009. Conversely, the same people often buy aggressively into market bubbles, like the technology debacle at the turn of this century.

Often these behaviours are the result of conditioned responses. We can have both good and bad investment habits. The key takeaway is understanding how they are created.

In his excellent book, The Power of Habit, Charles Duhigg explains why we continue to do self-destructive things. According to Duhigg, there are three components to forming a habit: cue, routine and reward.

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Letting go of what you cannot Control

In many areas of life, intense activity and constant monitoring of results represent the path to success. In investment, that approach gets turned on its head.