A Warning about Market Volatility and "Loss-Aversion"

The roller coaster ride on Wall Street in the wake of the Standard and Poor’s downgrade of the U.S. credit rating may have a serious psychological impact on investors.

Alok Kumar, the School’s Gabelli Asset Management Professor of Finance, offers advice for avoiding the pitfalls of “loss aversion” in this video.

Stock Market Swings May Increase Investor Overconfidence

Kumar says the huge stock market swings will also have investors seeing some of their own stock picks doing well compared to others.

In this video, Kumar warns that during these times of high volatility, investors should watch out for “self-attribution bias,” which could increase their overconfidence.