Advertisement:
You know you need life insurance, but how much and what kind? Get personalized answers from Nelsonomics creator Danny Nelson with a Life Insurance Blueprint.
Placeholder Lesson:
** This lesson is generated with AI assistance and approved by Danny Nelson. This lesson will communicate the essence of the topic for now until Danny can create a full lesson. **
The disposition effect is the tendency for investors to sell winning investments too soon and hold losing ones too long.
This happens because people want to lock in gains while avoiding the pain of realizing losses.
It often leads to poor investment performance over time.
The effect reflects emotional decision-making rather than rational analysis.
Investors caught in the disposition effect struggle to treat gains and losses equally.