Behavioural Finance: Checkpoint 1

Biased investors and limits on correcting prices together allow mispricing.

Loss aversion and regret make people reluctant to sell losers.

Costs and poor timing reduced the active traders' returns to about 11 percent versus 18 percent for the market.

Investors worldwide hold far more domestic stock than global diversification would suggest.

Luck, changing markets and high valuations mean past winners often fade.