Behavioral Insights into Investing: Why Smart Investors Still Make Bad Decisions

Behavioral Insights into Investing: Overconfidence Bias

In this episode of My Two Cents, we explore overconfidence bias: the tendency for investors to overestimate what they know, how well they can predict the market, or how skilled they are at picking winners. Listeners will learn how overconfidence can lead to too much trading, too much risk, and too little attention to what could go wrong. Research mentioned in this episode: Barber, B. M., & Odean, T. (2000). “Trading Is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors.”  https://faculty.haas.berkeley.edu/odean/papers/returns/individual_investor_performance_final.pdf [https://faculty.haas.berkeley.edu/odean/papers/returns/individual_investor_performance_final.pdf?utm_source=chatgpt.com] Gao, H., Shi, D., & Zhao, B. (2021). “Does Good Luck Make People Overconfident? Evidence from a Natural Experiment in the Stock Market.”  https://www.sciencedirect.com/science/article/abs/pii/S0929119921000547 [https://www.sciencedirect.com/science/article/abs/pii/S0929119921000547?utm_source=chatgpt.com] Hoffmann, A. O. I., & Post, T. (2014). “Self-Attribution Bias in Consumer Financial Decision-Making: How Investment Returns Affect Individuals’ Belief in Skill.”  https://www.sciencedirect.com/science/article/abs/pii/S2214804314000597 [https://www.sciencedirect.com/science/article/abs/pii/S2214804314000597?utm_source=chatgpt.com]

Behavioral Insights into Investing: Why Smart Investors Still Make Bad Decisions

Why do smart people still make investing mistakes? In the first episode of the series Behavioral Insights into Investing, My Two Cents explores how behavioral biases like overconfidence, herding, loss aversion, and the disposition effect can shape the way individual investors trade, react to risk, and make decisions. This episode also looks at why financial literacy matters, especially for teens who are increasingly interested in investing. Educational and awareness purposes only. Not investing advice. Research used in this episode: * Schwab 2026 Teen Investing Survey: 95% of teens are interested in learning more about investing, and 70% are very or extremely interested in investing. (aboutschwab.com [https://www.aboutschwab.com/schwab-teen-investing-survey-2026?utm_source=chatgpt.com]) * Systematic review on behavioral biases affecting individual investors: Emerald [https://www.emerald.com/qrfm/article/16/3/448/1233712/A-systematic-review-on-behavioral-biases-affecting] * Behavioral biases and individual stock investor behavior/performance: ScienceDirect [https://www.sciencedirect.com/science/article/abs/pii/S0275531915300593] * Financial literacy and behavioral biases in investment decisions: Frontiers in Psychology / PMC [https://pmc.ncbi.nlm.nih.gov/articles/PMC9549276/] * Financial literacy moderating behavioral biases and investment decisions: Emerald [https://www.emerald.com/ajar/article/7/1/17/59962/How-financial-literacy-moderate-the-association]

Teen-to-Investor Playbook with Gio Ahern: Investing terms, PE vs VC, and Health tech

In this episode, Mahima interviews Gio Ahern, an investing partner at Andreessen Horowitz, discussing his journey from high school to a career in investing. They explore the daily life of an investor, essential skills for young investors, and the differences between private equity and venture capital. Gio breaks down complex investment terms and shares insights on trends in healthcare technology. He also offers practical advice for young adults on personal finance, resources for learning about investing, and the importance of starting early with brokerage accounts and index funds. The conversation concludes with thoughts on the nature of money and investing, emphasizing a steady and boring approach to personal finance.

Scam-Proof Your Brain (Part 2): Digital Scams

In Part 2 of our "Scam-Proof Your Brain" series, we examine three digital scams that disproportionately affect teens: online shopping fraud, imposter scams, and cryptocurrency investment schemes. Mahima explores the phenomenon of perceived financial success in cryptocurrency, highlighting how social media influences investment behaviors and contributes to fraudulent activities by exploiting herding behavior. The episode also discusses other digital scams exploiting present bias and authority bias.  Episode references peer-reviewed research from the University of Rhode Island, Harvard Medical School, the National Institutes of Health, and the University of Vaasa.

Scam-Proof Your Brain (Part 1): Scholarship & Job Scams

In Part 1 of our "Scam-Proof Your Brain" series, Mahima examine's fake scholarship and job scams - two of the most common frauds targeting teens. Discover how scammers exploit scarcity and urgency manipulation to bypass critical thinking, and learn why optimism bias makes even smart people vulnerable. This episode references peer-reviewed research from Taylor's University, the Better Business Bureau Institute, and the FINRA Foundation.