S2 E5: Behavioral Insights into Investing: Confirmation Bias

S2 E5: Behavioral Insights into Investing: Confirmation Bias

Why do investors keep finding evidence that supports a stock they already believe in? This episode of My Two Cents: Behavioral Insights into Investing explores confirmation bias through the dot-com bubble and a study of nearly 400,000 StockTwits users. We look at how investors create information echo chambers, interpret good and bad news differently, and allow an investment thesis to survive even when the evidence begins to weaken. Research featured: A Mind Is a Terrible Thing to Change: Confirmatory Bias in Financial Markets https://academic.oup.com/rfs/article/30/6/2066/2740622 [https://academic.oup.com/rfs/article/30/6/2066/2740622] Echo Chambers https://academic.oup.com/rfs/article/36/2/450/6670640 [https://academic.oup.com/rfs/article/36/2/450/6670640]

S2 E4: Behavioral Insights into Investing: Herding - Why Following the Crowd Feels Safe

Why does an investment feel safer when everyone else is buying it? In this episode of Behavioral Insights into Investing, we explore herding—the tendency to follow the crowd when markets feel uncertain. Learn how social signals can shape investor decisions, amplify booms and crashes, and make popularity feel like proof. This episode is for educational purposes only and is not investing advice. Research featured: Herd Behavior in Financial Markets: A Review — International Monetary Fund https://www.imf.org/en/Publications/WP/Issues/2016/12/30/Herd-Behavior-in-Financial-Markets-A-Review-3487 [https://www.imf.org/en/Publications/WP/Issues/2016/12/30/Herd-Behavior-in-Financial-Markets-A-Review-3487]

S2 E3: Behavioral Insights into Investing: Loss Aversion

Why can losing $20 feel more powerful than gaining $20? In this episode of Behavioral Insights into Investing, we explore loss aversion, the disposition effect, and why investors may hold losing investments while selling winners too soon. We also look at how reference points, frequent portfolio checking, and emotion can shape investment decisions. This episode is for educational and awareness purposes only and is not investing advice. Research mentioned: Kahneman and Tversky, “Prospect Theory: An Analysis of Decision Under Risk” https://web.mit.edu/curhan/www/docs/Articles/15341_Readings/Behavioral_Decision_Theory/Kahneman_Tversky_1979_Prospect_theory.pdf [https://web.mit.edu/curhan/www/docs/Articles/15341_Readings/Behavioral_Decision_Theory/Kahneman_Tversky_1979_Prospect_theory.pdf] Terrance Odean, “Are Investors Reluctant to Realize Their Losses?” https://faculty.haas.berkeley.edu/odean/Papers%20current%20versions/AreInvestorsReluctant.pdf [https://faculty.haas.berkeley.edu/odean/Papers%20current%20versions/AreInvestorsReluctant.pdf] Shlomo Benartzi and Richard Thaler, “Myopic Loss Aversion and the Equity Premium Puzzle” https://www.nber.org/system/files/working_papers/w4369/w4369.pdf [https://www.nber.org/system/files/working_papers/w4369/w4369.pdf]

S2 E2: 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]

S2 E1: 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]