[Verse 1] When Sarah sees three coin flips landing heads She bets the fourth will match what she expects That's representativeness deceiving minds While anchoring chains us to the first price find Jack hears about one plane crash on the news Now flying terrifies him, availability's ruse [Chorus] Biases twist our financial sight Cognitive traps that dim our light Emotional pulls that steer us wrong Learn these patterns, sing along RAOA-CFH, remember the way Mental-Status-Endow, every trading day [Verse 2] Maria thinks her stock picks can't go wrong Overconfidence makes her portfolio song Turn sour when she seeks confirming views Ignoring data that contradicts her clues In hindsight bias, Tom claims he predicted The crash that left his savings so restricted [Chorus] Biases twist our financial sight Cognitive traps that dim our light Emotional pulls that steer us wrong Learn these patterns, sing along RAOA-CFH, remember the way Mental-Status-Endow, every trading day [Verse 3] Frame the choice as saving versus spending Mental buckets keep accounts defending Status quo keeps Anna from switching banks While endowment effect inflates her ranks Loss hurts twice as much as winning feels Regret avoidance spins decision wheels [Bridge] Herding follows crowds into bubbles bright Momentum carries trends both wrong and right Disposition sells winners, holds the loss Information cascades at any cost Arbitrage has limits, can't correct Every bias markets genuflect [Verse 4] When building client portfolios with care Identify which biases they bear Accommodate the ones they cannot change Moderate the rest within their range Emotional needs different treatment paths Than cognitive errors in financial math [Outro] Behavioral finance shows the human way Psychology in markets every day Recognize these patterns in your mind Leave costly mental shortcuts far behind
← GIPS Standards for Performance Reporting | Introduction to Behavioral Finance →