The lock-up at my company (LinkedIn) has come off, and I’m thinking about how to invest the proceeds from selling some of my shares. Is there an optimal strategy for investing my money into an asset allocation? Should I suddenly buy all at once or over a period of time? Psychologically, dollar cost averaging might make sense but I wonder if that is something people tell you so you sleep better at night and there is little scientific merit to it? – A reader Congratulations on the hard work that you and your colleagues put in at LinkedIn, which has put you in the position to ask this question. People in your situation — those who own a concentrated stock […]
This week saw two tech IPOs and news of one more in the offing, Yelp’s. If you’re one of those employees at a company that’s gone public or is preparing to go public, you may end up with options that are suddenly worth a lot of money, and facing questions about whether to exercise your options and then how much of the company’s stock to sell. Remember that keeping too much of your portfolio in one company’s stock – even your own company’s stock – is one of the investing practices academic researchers have consistently demonstrated is a mistake. (See The 9 Stupid Things Investors Do). In what’s known as familiarity bias, people tend to invest in what they know, […]
After many decades of public health campaigns, Americans know the sure-fire ways they can sabotage their health. Smoke. Eat too much. Be a couch potato.
Last year, the SEC asked the Library of Congress to survey the universe of research into investor behavior to come up with a similar list of ways that investors screw up.
Surprisingly, the evidence was clear-cut against nine specific practices, many of which are commonly, often implicity, promoted by the financial services industry and the media that covers it.
According to the Library of Congress, these are the nine most common investing mistakes (In some cases, the links below are to subscription sites, as some of the research is not available online for free.)