Behavioral pitfalls

Definitions of Statistical Terms

 * Standard Deviation
 * Skewness
 * Kurtosis
 * Tail Risk

Mental accounting
Mental accounting refers to a behavior that an investor treats a part of his money differently.

For example, if an investor gets a tax return from the IRS, he might spend it as if it were some found money even though the amount was an interest-free loan to the IRS.

As another example, an investor who inherits individual stocks from a close relative may have emotional attachment to those stocks even though he may be able to improve the risk adjusted return of his portfolio by selling the stocks and diversifying the proceeds.

Paralysis by analysis
Paralysis by analysis refers to a behavior that an investor doesn't do anything because he is overwhelmed with information.

For example, an investor may wonder whether he should go with Traditional IRA or Roth IRA. He might wonder forever and eventually end up not contributing at all to either account.

Articles

 * What Risk Matters, Robert Arnott, Financial Analysts Journal, (2003)
 * Bubble Logic: Or, How to Learn to Stop Worrying and Love the Bull by Clifford S. Asness, 08/2000
 * Rubble Logic: What Did We Learn from the Great Stock Market Bubble? by Clifford S. Asness, 2005
 * For Long-Term Investors, the Focus Should Be on Risk by Zvi Bodie and Paula H. Hogan, 06/2005
 * Risk and Risk Control in an Era of Confidence (or is it Greed?) by John Bogle, 04/06/2000
 * How Unusual Was the Stock Market of 2008? by Eugene F. Fama and Kenneth R. French, 05/04/2009
 * The Stockholm Syndrome and the Market by Todd Hickman, 07/22/2003
 * The Psychology of Successful Investing by Paul Merriman, 02/10/2005
 * Risk: What Exactly Is It? by Larry Swedroe, 08/08/2003

Institutional Research

 * Full Report: The Enviable Dilemma: Hold, Sell, or Hedge Highly Concentrated Stock? by Alliance Bernstein
 * Investment Solutions and Alternatives for Addressing Concentrated Equity by Vanguard Investment Counseling & Research, Donald G. Bennyhoff, CFA