My biggest investing mistakes of the last year

The problems with portfolio reviews

In early January, many investors like to publish end-of-year reviews. However, a form of selection bias undoubtedly affects who chooses to report. Those who have done well are more likely to put the effort in to write up their investing year. Professional investors have to report their performance, and their partners expect detailed commentary, which can give a more balanced view. However, even amongst these investors, having a strong year can introduce an element of hubris. Merriam-Webster summarises hubris as:

In classical Greek tragedy, hubris was often a fatal shortcoming that brought about the fall of the tragic hero. Typically, overconfidence led the hero to attempt to overstep the boundaries of human limitations and assume a godlike status, and the gods inevitably humbled the offender with a sharp reminder of his or her mortality.

Anyone who has invested for any period of time will recognise the feeling of being humbled by the market gods!

A second bias affects those reading portfolio reviews. Investors view someone with a particularly strong yearly performance as someone to be emulated. This may be true over the very long term. However, the time period that investors evaluate performance is typically three to five...