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What are your investment blind spots?
An investment blind spot can be similar to an emotional blind spot if it prevents you from seeing things (good or bad) that would make you want to change your previously held opinion of a certain investment. They can also be similar to a car blind spot if your buy or sell decision would’ve be opposite if you had viewed the data through a different view point.
I’ve found some investment blind spots are tied to a belief in a potential upcoming economic or social event (social security will go bankrupt / hyperinflation is around the corner, etc.), while some only relate to specific sectors of the market (technology / bonds / stocks, etc.) and others appear sporadically.
For example, I’ve caught myself in investment blind spots many times when a stock I’ve purchased has fallen in value and unfortunately, the bigger the loss the bigger the blind spot. I tend to overlook or discount new data that made the stock price fall in favor of the rosy story I told myself when I decided to buy the stock.
One of my friend’s investment blind spots popped up recently when he came across a fund that was paying a very high income. The only view point he was looking through when deciding what to buy was what investment was paying the highest income. When we sat down, however, and looked at the fund from a different perspective (not just income but also total return which is growth + income – losses) we both decided not to invest.
What about you?
What investment blind spots have you found yourself in?
