Expensive investor mistakes come in two forms. We can either lose money slowly or quickly. Slow losses are small and compound over time – largely unnoticed – growing into a major cost; these can be through high fees or persistent performance chasing. Rapid losses are far more dramatic and are often a result of us having our investments unnecessarily concentrated in an asset class, fund or scheme that suffers a savage and irrecoverable decline. The most damaging sudden loss scenarios are typically investment bubbles and outright frauds. Although these two phenomena appear distinct, they exploit the same behavioural vulnerabilities.
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