I've made just about every investing mistake you can make. I've panic-sold at the bottom. I've chased hot stocks that everyone else was buying. I've held onto losers for years because selling would mean admitting I'd been wrong. I've convinced myself I was being 'contrarian' when really I was just being stubborn. I've checked my portfolio five times a day during volatile weeks and convinced myself every twitch in the market was a signal I ought to be acting on.
Here's what took me far too long to understand: none of these mistakes were about not knowing enough. They weren't about bad luck. They weren't about the market being unfair. They were about psychology. Specifically, they were about the fact that the human brain — my brain, your brain, everyone's brain — evolved to survive on the savannah, not to manage a portfolio. The same instincts that kept our ancestors alive — fear of loss, following the herd, overconfidence in familiar patterns — are precisely the instincts that destroy investment returns.
There's an entire academic field devoted to this, called behavioural finance. It studies how psychology influences financial decision-making. What the researchers have found is that we're not the rational, calculating investors that traditional economic theory assumed. We're emotional, biased, and remarkably predictable in our mistakes. Understanding this was, for me, the single biggest breakthrough in my investing life. Not learning about P/E ratios. Not finding the cheapest platform. Understanding that I am my own worst enemy.
Let me walk through the biases that have cost me the most money over the years — and what I do now to keep them in check. This is not advice. It's just what I've learned from being wrong in almost every way it's possible to be wrong.
Loss aversion is the big one. Psychologists have found that losses hurt about twice as much as equivalent gains feel good. Losing £100 feels roughly twice as bad as winning £100 feels good. This asymmetry means we'll do almost anything to avoid the pain of a loss — including selling investments at precisely the wrong moment. I did this spectacularly in 2008. My portfolio was down, every headline screamed disaster, and the pain of watching the numbers fall every day became unbearable. So I sold. Not everything, but a big chunk. The relief was immediate — and fleeting. What followed was years of watching the market recover from the sidelines, too scared to get back in. That one decision, driven entirely by the instinct to stop the pain, cost me more than any bad stock pick ever did.
Then there's herd mentality — the deep, ancient instinct to do what everyone else is doing because safety lies in numbers. In investing, this shows up as buying what's popular because it feels safer to be wrong in company. I've done this. During the dot-com bubble, I bought tech stocks I didn't understand because everyone else was buying them and they were going up. When they crashed, I took comfort — genuine comfort — in knowing I wasn't the only one who'd lost money. That comfort was expensive. The herd doesn't protect you. It just makes you a participant in collective mistakes.
Confirmation bias is subtler and, in some ways, more dangerous because it feels like doing research. Once you've formed an opinion about an investment, your brain actively seeks out information that supports that opinion and dismisses anything that contradicts it. I once convinced myself a particular stock was undervalued. I read every bullish article I could find and dismissed every bearish analysis as 'they don't understand the business'. The stock went nowhere for years. I wasn't doing research. I was collecting evidence for a verdict I'd already reached.
Recency bias is the one that catches me even now. It's the tendency to assume that whatever has been happening recently will continue happening. When markets have been going up for years, we start to believe they always go up. When they've been falling, we start to believe they'll never stop. This bias is why people feel most confident buying at market tops and most terrified at market bottoms — exactly the opposite of what would serve them. I've learned to recognise the feeling: when I'm most convinced the market will keep rising, that's when I need to be most careful. When I'm most certain it's going to zero, that's probably when I should be buying.
Overconfidence is perhaps the most expensive bias of all for DIY investors. Study after study shows that most people rate themselves as above-average drivers, above-average at their jobs, and — you guessed it — above-average investors. The evidence says otherwise. Over a 15-year period, roughly 90% of professional fund managers underperform the broader market. That's professionals with teams, data, and decades of experience. If they can't consistently beat the market, what chance do I have with a laptop and some evenings? The answer is obvious, but overconfidence makes it hard to accept.
So what do I actually do about all this? How do I invest when I know my own brain is working against me? The answer, for me, has been systems. I don't try to outthink my biases in real time — I build systems that make the biases irrelevant. Here's what works for me.
First, automation. I have a monthly direct debit that buys the same amount of the same global ETF on the same day every month. I don't decide whether to invest. I don't decide how much. I don't decide when. The system decides. This removes loss aversion, recency bias, and market timing from the equation entirely. When markets are down, my £500 buys more shares. When they're up, it buys fewer. I don't need to feel anything about either outcome.
Second, I almost never check my portfolio. This sounds counterintuitive — shouldn't you monitor your investments? For me, the answer is no. Every time I check, my brain finds something to react to. A stock is down 2% — should I be worried? The market hit a new high — should I take profits? The checking itself creates the urge to act, and the action is almost always a mistake. I look at my portfolio quarterly. That's it. The rest of the time, the auto-invest does its work without me watching.
Third, I write down my rationale before I buy anything new. What am I buying? Why? What would make me sell? How long am I planning to hold? Writing it down forces me to articulate a real reason rather than a feeling disguised as analysis. And it gives me something to look back at later when I'm tempted to sell for reasons that have nothing to do with my original thesis.
Fourth, I've stopped reading daily financial news. This one was hard. I used to start every morning scanning market headlines, convinced I was 'staying informed'. What I was actually doing was filling my head with noise that made me anxious and trigger-happy. Markets move every day. Most of those movements mean nothing for a long-term investor. Now I read quarterly reports and the occasional long-form piece. The daily noise adds nothing but stress.
The common thread in all of these is the same: I don't trust myself to make good decisions in the heat of the moment. So I remove the moment. I make decisions once — the strategy, the allocation, the schedule — and then I let the systems execute while I get on with my life. It's not exciting. It's not clever. It's not going to make me rich overnight. But it has stopped me from being my own worst enemy, and that alone has been worth more than any stock tip I've ever received.
The difference between successful and unsuccessful investors isn't intelligence. It isn't information. It isn't access to better tools or platforms. It's the ability to manage your own psychology — to recognise when your brain is working against you and to have systems in place that prevent you from acting on every fear, every greedy impulse, and every confident-but-wrong conviction. I wish I'd learned this at 30 instead of 60. But I'm glad I learned it at all.
For educational purposes only. Nothing here is financial advice. All investing carries risk — markets go down as well as up, and you may get back less than you put in. Past performance does not guarantee future results. These are just the lessons I've learned from my own mistakes — they may not apply to you.