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Attach or "anchor" your thoughts or beliefs on a singular reference point that actually has no logical reference to your decision
separating money into different groups (mentally) based on some subjective reasoning
having preconceived notions about something (or someone) and then giving more attention to those details that support your preconceived notions and less attention to those details that deny your preconceived notions.
the onset of a past event was easily predictable based on facts x, y, and z when really it was not predictable
too much confidence in your own skills or knowledge
individuals assume that a random event is less likely (or more likely) to occur based on a series of previous events
Individuals like to mimic the actions (or inactions) of a group at large
- Individuals place too much importance on new information
- ie good info is REALLY good, bad info is REALLY bad
gains and losses are valued differently by individuals would rather not lose than to gain
small firms have larger market returns in January, than in the rest of the year
Day of the Week Effect - anomaly
Mondays typically have a lower average return than the other four trading days of the week
IPO Pricing - anomaly
typically, investors that purchase an IPO stock on day 1 and then sell it the same day earn a much higher return, then investors that purchase on day 1 and sell it on day 365
cash flows will not materialize as we expect them to because of something. Something = risk
systematic (measured in BETA) effects large group of assets or companies
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