Why do intelligent people keep making the same investing mistakes?
Why does a trader hold onto a losing position despite having a perfectly good exit rule?
Why does a property investor become convinced that yesterday’s price tells them what something should be worth today?
And why can a run of success sometimes make us more vulnerable to making a costly mistake?
The answer may have very little to do with the investment itself.
It has everything to do with how our brains are wired.
In this special simulcast episode, Louise Bedford joins property investment expert and her own property mentor, Michael Yardney, for a fascinating discussion about the hidden cognitive biases that quietly influence our investment decisions.
Whether you trade shares, invest in property or build wealth across multiple asset classes, these psychological blind spots can influence your decisions without you even noticing.
Together, Louise and Michael explore five powerful cognitive biases – confirmation bias, loss aversion, recency bias, anchoring and overconfidence.
But this isn’t simply a psychology lesson.
Louise brings the trader’s perspective. Michael brings decades of experience in property investing. Together, they compare how remarkably similar human behaviour becomes when money, uncertainty and ego enter the equation.
Because the investment might change.
The psychology doesn’t.
And sometimes understanding the person making the decision can be far more valuable than trying to predict what the market will do next.
Key Takeaways
- Discover five cognitive biases that can quietly undermine investment decisions.
- Learn why traders and property investors often make remarkably similar psychological mistakes.
- Understand how confirmation bias, loss aversion, recency bias, anchoring and overconfidence influence your thinking.
- Discover practical ways to recognise these mental traps before they influence your decisions.
- Learn why a strong investment or trading process can protect you when your own brain starts getting in the way.
Questions We Explore
- Which cognitive bias costs investors the most money? And are traders really any better than property investors at recognising when their own thinking is distorted?
- Why is confirmation bias so difficult to spot? We explore why investors seek out evidence that supports what they already believe – and quietly dismiss information that challenges them.
- Why is taking a small loss so psychologically difficult? And how can an attempt to avoid the discomfort of being wrong turn a manageable loss into a much larger one?
- When does patience become denial? Property investors are often encouraged to think long term, while traders are taught to cut losses. Where is the line between conviction and refusing to accept that circumstances have changed?
- Why do we assume the recent past will continue? We look at recency bias, from traders who abandon a sound system after a string of losses to investors who become convinced a booming market will keep rising indefinitely.
- Why do old prices have such a powerful hold over us? Whether it’s a trader waiting for a share to return to their entry price or a property investor fixated on a previous valuation, anchoring can make an irrelevant number feel enormously important.
- Can success actually make you a more dangerous investor? Louise and Michael explore why winning streaks can breed overconfidence, encourage greater risk-taking and convince investors that the rules which once protected them no longer apply.
- What can we actually do about these biases? Can we eliminate them – or is the real advantage in recognising them and building a decision-making process that prevents them from taking control?
The Five Biases
Confirmation Bias – We seek evidence that proves we’re right and discount evidence that suggests we might be wrong.
Loss Aversion – The desire to avoid the pain of losing can turn a small, manageable loss into something much larger.
Recency Bias – We give too much importance to what has happened lately and convince ourselves it will continue.
Anchoring – We attach meaning to an old price, valuation or reference point that may no longer have any relevance.
Overconfidence – Success can convince us that our ability is greater than it really is – and that the rules no longer apply.
Smart investing isn’t about eliminating your biases. It’s about building a process strong enough to stop your biases from making the decisions.
About Michael Yardney
Michael Yardney is one of Australia’s leading property investment experts, a best-selling author, educator and commentator on wealth creation.
Through Metropole Property Strategists, Michael has spent decades helping Australians understand property markets, investment strategy and the behaviours that influence long-term investment success.
He is also the host of The Michael Yardney Podcast, where he explores property, investing, economics, psychology and the habits and decisions behind building lasting wealth.
Michael is also Louise Bedford’s property mentor – making this conversation a fascinating meeting of two investment worlds: property and trading.
Get in Touch with Michael
Website: https://metropole.com.au/
Website: https://propertyupdate.com.au/
Podcast: https://propertyupdate.com.au/category/michael-yardney-podcast/
LinkedIn: https://www.linkedin.com/in/michaelyardney/
Next Steps:
- Explore Louise’s Trading Made Simple video course, free at tradinggame.com.au, to put these principles into practice.
- For deeper insight into risk management, check out my books Trading Secrets and Charting Secrets.
About Louise Bedford
Louise Bedford has traded, taught, and written extensively about the financial markets for over 30 years. Over this time, she has built a reputation as a highly accomplished and experienced trader, educator, and author.
She co-founded The Trading Game and has gained recognition for her unique approach to teaching trading psychology and market analysis.
Louise has authored several successful trading books. In particular, her titles include Trading Secrets, Charting Secrets, The Secret of Candlestick Charting, and Investing Psychology Secrets.
Louise runs her hugely popular, repeat-for-free Mentor Program Pro online course. Through this course, she shows you how to automate your trading so you can retire early and get on with your life.
Did you know you can book a free 30-minute call with Louise to discuss your current trading strategies?
Just click the button below to take the quick survey, and then you’ll be able to choose a time to talk to Louise.
Other ways to get in touch with Louise
Facebook: https://www.facebook.com/TradingGame/
X: https://x.com/TheTradingGame
LinkedIn: https://linkedin.com/in/louise-bedford/
Youtube: https://www.youtube.com/tradinggame
TikTok: https://www.tiktok.com/@tradinggame.com.au
Instagram: https://www.instagram.com/tradinggame.com.au/
Image by AI Google Labs
