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Paul Brandus: We overreact to terrorism for the same reason we’re bad at investing

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People wait at the Ground Zero south reflecting pool

Most people are lousy investors (not you, of course) because they, among other things, allow too much noise to interfere with their decision-making process. They hear something on TV, see a scary headline on a website and their emotions kick in. They trade too often, buying high, selling low and not achieving their investment goals. Warren Buffett said it best: “Sober judgement is a commodity in a world of emotional investors.”

In certain ways, this also describes how most of us think about, and react to, terrorism. We’ve spent the last 15 years being scared and overly emotional about something that statistically just isn’t much of a threat.

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