Cognitive Dissonance

Cognitive Dissonance

Cognitive Dissonance

Curious Investor Behaviour – Number 9

Cognitive Dissonance

When there is a conflict between our beliefs and reality, we tend to rationalise irrational behaviour.

Cognitive dissonance was first observed by Leon Festinger, a psychologist who studied a cult which believed that the earth was going to be destroyed by flood. When the flood didn’t arrive as expected, the cult leaders re-interpreted the evidence to prove that it was their faith and prayers that saved the world.

Investors, too, are often guilty of engaging in similar self-deception – do you ever find it difficult to let go of an idea or a stock that you’re attached to?


Disclaimer: Platinum Asset Management Limited ABN 25 063 565 006 AFSL 221935 (Platinum ®) has commissioned this illustration  for your reading enjoyment. There is no intention to provide investment advice, and information presented does not take into account the investment objectives, financial situation and/or particular needs of any person or class of persons. Platinum offers financial products. Further information and a Product Disclosure Statement can be obtained from www.platium.com.au or by phoning 61 2 9255 7500 or 1300 726 700. Before making any investment decision, it is important that you consider (with your financial adviser) your particular investment needs, objectives and financial circumstances. Platinum is a member of the Platinum Group of companies.

About Reuben Zelwer

 

Reuben Zelwer established Adapt Wealth Management in 2011 to help time poor clients achieve financial freedom. For over 15 years, Reuben has helped professionals, executives, business owner and those approaching retirement make the most of their circumstances by making good financial decisions. Reuben’s professional practice is complemented by substantial voluntary work, which has included setting up financial literacy and savings programs in the local community.

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