How your cognitive biases lead to terrible investing behaviors | Barry Ritholtz: Full Interview
Synopsis: How Your Cognitive Biases Lead to Terrible Investing Behaviors | Barry Ritholtz: Full Interview
In this insightful interview, Barry Ritholtz, chairman and chief investment officer of Ritholtz Wealth Management, delves into the profound impact of cognitive biases on investing strategies. He argues that while investment principles are well-established—emphasizing average returns, inflation, and economic trends—human behavior remains the unpredictable variable that can undermine financial success.
Ritholtz highlights key cognitive traps such as loss aversion, confirmation bias, and the tendency to react emotionally to market fluctuations. He elaborates on how these instincts, rooted in our evolutionary past, often lead to panic-driven sell-offs or greed-fueled buying sprees. Using examples from significant market events like the GameStop surge, he illustrates how emotional responses can overshadow calculated decision-making.
Furthermore, Ritholtz introduces the concept of “the loser’s game” in investing. He explains that, akin to amateur tennis, most investors falter by making unforced errors rather than executing sound strategies. Emphasizing automation, diversification, and a long-term perspective, he provides valuable advice on how to avoid common pitfalls.
Ultimately, Ritholtz calls for self-awareness among investors, urging them to recognize and control their biases to enhance their financial well-being. This thought-provoking discussion serves as a crucial reminder that successful investing is less about picking stocks and more about managing our behavior.
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Author Video Description
“Let me walk you through the biggest traps that you should be aware of that are a danger to your financial wellbeing.”
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You probably think investing is about markets and strategy, but Barry Rithotz argues that it’s actually about biology.
Our brains evolved to spot danger, not to manage portfolios, and the instincts that once kept us alive now push us towards panic and greed. That same wiring that told our ancestors to run from predators now tells modern investors to sell at the bottom.
0:00 Why your brain makes you a bad investor
2:28 Using our brains in ways they weren’t built for
3:57 Cognitive biases that derail investing
6:52 Emotional Bias
8:22 Gamestop and speculative bets
10:22 Narrative fallacy
12:01 Overconfidence bias and the Dunning-Kruger effect and
12:44 Confirmation bias
14:56 Conformity bias
16:25 Loss aversion
17:47 Anchoring
18:41 Tribal bias
20:19 Recency bias
23:51 Investing is a loser’s game. Here’s how to win
24:28 “The Loser’s Game”
27:28 2% of stocks are responsible for all returns
30:21 The odds against you picking successful stocks
31:52 Maximizing your ability to compound
32:02 Automate
33:03 Diversification
34:23 Costs
37:48 Rebalancing
39:54 Ignoring forecasts
42:15 Market timing
44:29 How financial media sets investors up for failure
46:06 The attention economy
46:55 What is margin debt?
48:03 How negative media influences our investments
50:30 Denominator blindness
54:07 Key qualities in financial media
56:35 Social media and investing
Read the video transcript ► https://bigthink.com/series/full-interview/barry-investing-mistakes/?utm_source=youtube&utm_medium=video&utm_campaign=youtube_description
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About Barry Ritholtz:
Barry L. Ritholtz is co-founder, chairman, and chief investment officer of Ritholtz Wealth Management LLC. Launched in 2013, RWM is a financial planning and asset management firm, with over $6.4 billion dollars in assets under management. RWM was named ETF Advisor of the Year, is on the Financial Times Top 300 Advisors in the US, and is the 4th fastest-growing RIA in America.
His career history is filled with cutting-edge innovation and influential new ideas: He was one of the earliest traders to embrace behavioral economics, he created one of the first and most popular market blogs; his podcast was groundbreaking and among the earliest in the investment spaces. Named one of the “15 Most Important Economic Journalists” in the United States, he has been called one of the 25 Most Dangerous People in Financial Media. He writes a weekly column for Bloomberg Opinion (2013- 2021) and wrote a twice-monthly column on Personal Finance and Investing for The Washington Post (2011-2016).
His latest book, “How Not To Invest: The ideas, numbers, and behaviors that destroy wealth – and how to avoid them” was published on March 18, 2025.
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Video “How your cognitive biases lead to terrible investing behaviors | Barry Ritholtz: Full Interview” was uploaded on 10/24/2025 to Youtube Channel Big Think