Sean Pyles

Do you remember that?

Yes.

What a scam that was.

I wonder how many people are still holding on to their NFTs, hoping that they'll make some money from them.

I didn't buy any, thankfully.

Me either.

Now we have overconfidence bias, and that's being a little too cocky about your ability to invest or make other financial decisions, leading to you making risky or under-informed decisions.

Okay, so let's talk about how each of these biases is losing you money, starting with loss aversion.

The big issue here is often for active investors who are buying and selling individual stocks because people hate losing money so much.

They might hold onto a stock that is a real loser when they'd be better off just selling that stock.

Lots of people are divided on crypto, but it does make me think about that because I do peek into my crypto account sometimes and I'm like, should I sell or should I hold?

But I'm just hoping that one day crypto will retire me.

We'll see.

I'm hoping that for you, too.

Thank you.

All right.

So here's an example of loss aversion.

Let's say that you buy a stock of a company that you've been eyeing right after they go public because you think that company is going to be successful long term.

You think they're going to blow up and the stock price is going to go up over time.

But then, dum-dum, a few years go by and the stock is half of what it was when it went public.