SS.912.FL.5.9

Examine why investors should be aware of tendencies that people have that may result in poor choices, which may include avoiding selling assets at a loss because they weigh losses more than they weigh gains and investing in financial assets with which they are familiar, such as their own employer’s stock or domestic rather than international stocks.

Remarks

Explain why investors may sell stocks that have gained in value, but hold ones that have lost value. Explain why this may not make sense.
Identify an example of why an investor may have a bias toward familiar investments and why this may or may not be a rational decision.