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Behavioral Finance

One of the biggest challenges to our personal or business financial success can be our own behavioral biases. When you and your advisors share an understanding of behavioral finance concepts, you better position yourself to identify the often illogical and irrational decisions all humans are prone to make. It takes an open mind and willingness to self asses, but if done with conviction and regularity, the process of behavioral assessment can deliver life changing results.

Behavioral finance is a relatively new area of study that was legitimized when Dr. Daniel Kahneman (considered the dean of behavioral finance) was awarded the Nobel Prize in Economics for having integrated insights from psychological research into economic science, especially concerning human judgement and decision-making under uncertainty. Along the way, a number of behavioral biases have been identified as “most common to investors”, many of which are personified in the graphic below:

The Point: Letting your emotions control your decisions can be costly.  It's also unnecessary, given the vast array of investment solutions available to the investing public that allow investors to control and manage risk.  Would you like your investments to produce income but you are concerned about interest rate and systematic risk; consider tactical high yield strategies.   Are you looking for stock like returns with potentially lower downside risk; consider structured notes or indexed CD's.  While these are not recommendations to buy securities or use a particular strategy, they are viable alternatives to traditional asset allocation that may help temper that which can impact your investment performance most of all, "You"!


Structured notes and indexed CD's as well as Tactical high yield strategies have risk and may loose value.  Past performance is not indicative of future results.  Please consult your financial advisor before investing in these or any investments.