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Learning Wrong Lessons
- People learn the wrong lessons from market experiences.
- They over-generalize, like avoiding internet stocks after the dot-com bubble instead of learning to evaluate assets.
Othering and Mistakes
- We attribute others' mistakes to their disposition, while attributing our own to the situation.
- This "othering" prevents us from learning from others' errors.
Use Rules-Based Investing
- Create investment policies and procedures to avoid emotional decision-making.
- Mechanical processes help bypass emotional pitfalls like holding losing stocks.