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The psychology of investment – or how not to lose your shirt

The thinking behind investing
“If you can keep your head when all about you are losing theirs … then clearly you haven’t realised how seriously bad things are” (with apologies to Rudyard Kipling)

Despite the increasing reliance on computers and algorithms, investment remains a very human world and is driven by sentiment, as much as economics. Indeed, some investors have unswerving confidence in their ability to spot the next “sure thing”, or to predict market direction – self-congratulating when right, and going into utter denial if the investment plummets.