How stress and anxiety leads to bad decisions by portfolio managers

Stress. Information Overload. Rushing or urgency. Outcome Fixation. And Much more.

Serious portfolio managers investing with an active investment mandate tries to understand and avoid inherent biases in human nature and decision making. And with that design decision rules and evaluation procedures that removes the unwanted from the investment outcome.

Behavioral finance goes some way to explaining what to do and not to, but still assumes rational professional investors can overcome these faults. Serious research based on psychology have taken the subject further.

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