Humans in generalized terms, for the most part are resistant to change. It is their nature to generally like things to stay the same. Within investing, Status Quo bias can work against the investor. Investors may be reluctant to embrace new ideas, or resistant to new research, when it conflicts with their existing beliefs. For example, An investor who has only ever invested in stocks may be resistant to investing in other assets like bonds, real estate, CEF's MLP's etc. Status Quo Bias can even effect investors taking on too much risk for example - as they near retirement years when they should be lowering their overall risk profile they may find themselves reluctant to embrace change even when presented with updated facts.
Status Quo bias can manifest itself by actually inhibiting an investors investment objectives by their willingness to distort or interpret or outright dismiss new facts, or view those new sets of facts through a biased lens of preconceived notions all in an effort that provides proof to maintain the Status Quo without further unbiased examination and quality review analysis based upon the new set of facts.
For the DGI investor -
A stock neither knows you, nor loves you. If there is a probability corporate fundamentals or strategic direction of even a long term portfolio investment may have changed Objectively interpreting the new sets of facts and avoiding emotional decisions is critical to avoid Status Quo Bias
Take care of each other, it can get rough out there.
- Scoot
"The herd instinct among forecasters makes sheep look like independent thinkers."-George Fielder
“Forecasters tend to learn less and less about more and more, until in the end they know nothing about everything.”Edgar Fiedler
Status Quo bias can manifest itself by actually inhibiting an investors investment objectives by their willingness to distort or interpret or outright dismiss new facts, or view those new sets of facts through a biased lens of preconceived notions all in an effort that provides proof to maintain the Status Quo without further unbiased examination and quality review analysis based upon the new set of facts.
For the DGI investor -
A stock neither knows you, nor loves you. If there is a probability corporate fundamentals or strategic direction of even a long term portfolio investment may have changed Objectively interpreting the new sets of facts and avoiding emotional decisions is critical to avoid Status Quo Bias
Take care of each other, it can get rough out there.
- Scoot
"The herd instinct among forecasters makes sheep look like independent thinkers."-George Fielder
“Forecasters tend to learn less and less about more and more, until in the end they know nothing about everything.”Edgar Fiedler
