What does our need for comfort cost us when we invest?
Financial media still propagate the misconception that investors focus on earnings with the highest returns. The truth is that investors want the best risk-adjusted returns, meaning that they will trade some upside for safety.
However, trading for emotional comfort comes at a price. A recent Barclays' white paper estimates the primal human need for emotional comfort costs investors 2%-3% per year in returns. This . . .