The principles of Behavioral Finance are critical for each investor to understand and incorporate into their investment planning construct in order to maximize the probability of achieving their financial goals and to avoid taking actions that create permanent capital loss.
Two of the most successful investors who have ever lived understood and, in Warren Buffet’s case, still understand that the ability to keep emotions from influencing investment decisions is the single most important factor. According to Buffet, “To invest successfully over a lifetime does not require
a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.”