Avoid Common Investment Management Pitfalls

The decision-making process for fundamental investment managers is rapidly changing. Managers are adopting improved measurements of their research and how it impacts their portfolio.  This research has led to straightforward solutions to the eight easy-to-fix mistakes many money managers make.

Outdated, instinct-based approaches falter. Replacing these practices with a disciplined investment process will help firms produce better returns and use their own data more effectively daily. In this paper, we discuss the following common investment process mistakes and how to fix them:

  1. Confidence bias
  2. Good stock paradox
  3. Value trap
  4. Conflating higher risk with higher return
  5. Dealing with losers
  6. ETF hedge
  7. Not knowing the best ideas
  8. Positions overload

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