Latest / Behavioral Economics with Fexingo: Decision Making, Bias, and How People Really Spend
The Endowment Effect In Your Investment Portfolio
Lucas and Luna explore how the endowment effect makes investors hold onto losing positions far longer than rational models suggest. Using a specific case of a mid-cap industrial firm that lost forty percent of its value but stayed in portfolios due to emotional attachment, they break down why we overvalue what we own. The conversation connects this behavioral bias to real-world portfolio drag, offering concrete strategies to identify and correct for ownership bias before it erodes long-term compound annual growth rate returns.
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