2023 investing mistakes

There is nothing special about another orbit of the Earth around the sun that makes it essential to measure investment performance. However, the end of a calendar year is a natural point for investors to take stock of their recent performance. Hence, this is the time of year when investors tend to publish portfolio reviews. This is something I feel torn about. On the one hand, I genuinely enjoy reading about other investors' progress or pitfalls. However, learning about other investors' performance can lead to several biases.

Investment Behavioural Biases

These biases are usually based on a form of myopia – an unduly short-term focus. A year is a relatively short period to test an investment strategy, and continually comparing short-term performance to other investors is unlikely to help bring Investment success. After a good year, investors may succumb to hubris and become overconfident. Merriam-Webster says that:

In classical Greek tragedy, hubris was often a fatal shortcoming that brought about the fall of the tragic hero. Typically, overconfidence led the hero to attempt to overstep the boundaries of human limitations and assume a godlike status, and the gods inevitably humbled the offender with a sharp reminder of his or her mortality.

Overconfidence often leads...