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If you’ve taken our past advice about ignoring the onslaught of breaking market news, you probably didn’t read Russell Investments’ recent “2017 Global Market Outlook Q4 Update.”

Welcome back to our “ABCs of Behavioral Biases.” Today, we’ll get started by introducing you to four self-inflicted biases that knock a number of investors off-course: anchoring, blind spot, confirmation and familiarity bias.

ANCHORING BIAS

While the Equifax security breach only recently became public knowledge on September 8, in many ways, it was a lifetime ago.

By now, you’ve probably heard the news: Your own behavioral biases are often the greatest threat to your financial well-being. As investors, we leap before we look. We stay when we should go. We cringe at the very risks that are expected to generate our greatest rewards.

It will soon be the 10-year anniversary of when, in early October 2007, the S&P 500 Index hit what was its highest point before losing more than half its value over the next year and a half during the global financial crisis.

Whether you call Houston and its surroundings home, or you’ve never been there before, it’s hard to watch the unfolding news coming out of Texas and not feel a shared anguish at the state-wide devastation being wrought by Hurricane Harvey.

Whether it’s sudden and unexpected or after an already lengthy ordeal, there’s nothing that can prepare you for losing your spouse. Grief and mourning affect each of us uniquely, but all widows and widowers share a painful dilemma: on the one hand, the world seems to demand rapid response to a barrage of critical questions – financial and otherwise.

By Bruce A. Gray, CPA, CGMA

If you enjoy fine literature, we recommend all of Warren Buffett’s annual Berkshire Hathaway shareholder letters, dating back to 1965. While financial reports are rarely the stuff from which dreams are made, Buffett’s way with words never ceases to impress. His most recent 2016 letter was no exception, including this powerful insight about market downturns:

by Ben Carlson