CFA CFA Level 3 Behavioral Finance- Myopic loss aversion

Behavioral Finance- Myopic loss aversion

  • This topic has 3 replies, 3 voices, and was last updated Jul-17 by mitch895.
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    • RaviVooda
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      Can somebody help me explain this topic is simple terms?

    • Zee Tan
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      Myopic = short sightedness. Therefore myopic loss aversion = the focus on avoiding short-term value loss at the cost of long-term gain. Causes e.g. panic selloffs during bubble bursts or any kind of sharp decline.

      Investors that check on the values of their portfolio with great frequency are more likely to be subject to this particular bias.

    • RaviVooda
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      Thanks @Zee. That helps.

    • mitch895
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      If you have the time, check out James Montier’s epic book “Behavioural Investing”. Covers pretty much every corner of investor psychology (and even fires a few shots at modern portfolio theory)

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