Investors' Chronicle Don’t Panic, Profit: The psychology of better investing
Oct 29, 2025
In this insightful discussion, Dr. Ylva Baeckström, a Senior lecturer in finance at King's Business School, explores the crucial intersection of psychology and investing. She highlights how emotions can cloud financial judgment, especially during market downturns, and discusses gender differences in investment behavior. Dr. Baeckström advocates for better financial education and representation of women in finance, pointing out that women often have more successful portfolios despite facing systemic biases. She also offers practical tips to empower all investors.
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Use Passive Funds For Broad Exposure
- Choose passive funds to mirror a market index and avoid betting on single-stock winners.
- Val Cipriani recommends passive investing for diversification and to limit hype-driven choices.
Biases Skew Portfolio Choices
- Common cognitive biases shape investment behaviour, like familiarity and home bias that skew portfolios.
- Val Cipriani highlights we prefer known brands and local markets even when global diversification matters.
Behavioural Gap Cuts Returns About 3%/Year
- Behavioural mistakes create a gap of about 3% a year between ideal and actual returns.
- Val Cipriani cites Oxford Risk's estimate that the behavioural gap compounds into significant lost wealth.