Investment Biases That Hurt Chiropractors (And Hot to Avoid Them)

Why Your Investment Returns Are Lower Than You Think (And What To Do About It)

Most people believe that successful investing comes down to picking the right stocks, timing the market, or finding the next big thing. But the data tells a completely different story: your behavior matters far more than the actual investments you choose.

The Behavior Gap: A Costly Reality

Here's a stat that fundamentally changed how I view investing: Dalbar, an independent research firm that analyzes investor behavior, found that over the last 30 years, the average equity investor earned approximately 6.8% per year while the S&P 500 earned 9.65% per year.

That's a 2.8% performance gap purely due to human behavior.

The biggest drag on your investment returns isn't the market—it's us. Fear and greed drive most poor decisions: buying high when we're excited and selling low when we're scared.

The Seven Most Common Investment Biases

Biases aren't character flaws—they're hardwired into all of us. We can't eliminate them, but we can recognize them and build systems to help push them out of the way.

1. Overconfidence Bias - Thinking we know what the market will do next.

2. Recency Bias - Believing the recent past will repeat itself.

3. Confirmation Bias - Seeking information that supports our existing beliefs.

4. Herd Behavior - Following what everyone else around us is doing.

5. Sunk Cost Fallacy - Holding losers because selling feels too painful.

6. Loss Aversion - Losses hurt more than gains feel good.

7. Home Country Bias - Overweighting your country's market.

Real-World Examples

The 100% US Equity Investor

A doctor I met wanted to remain 100% invested in US equities because they'd been outperforming Canada for years. This is classic overconfidence and recency bias—assuming past performance will continue indefinitely. What's interesting? In 2025, Canadian equities have actually outperformed US stocks.

The Cryptocurrency Enthusiast

Another investor wanted nearly all his wealth in cryptocurrency after Bitcoin's 400% run over five years. Yet in 2025 alone, Bitcoin is down about 5% while the broad global equity market is up 18.5%. Success with one asset often breeds overconfidence that clouds future judgment.

The Holder of Losing Stocks

A client held several individual stocks that had performed poorly but couldn't bring himself to sell them. When I asked if he'd buy those same stocks today, he said no. This is loss aversion and sunk cost fallacy—making emotional decisions instead of rational ones.

The Home Country Bias Problem

Most Canadians hold at least 50% of their portfolio in Canadian equities. The reality? Canada only makes up about 3% of the global market. Research suggests 25-30% Canadian exposure is reasonable, but not much more.

Seven Takeaways for Better Investing

1. The goal isn't to beat the market—it's to get the market return. Close that 2-3% behavior gap.

2. Understand your investment strategy. If you don't understand it, you won't stick with it. Simple beats complex.

3. Average returns for the longest time wins. Slow, steady, disciplined investors outperform those chasing trends.

4. Be truly diversified. Think 13,000 companies globally across every major country and sector.

5. Keep costs low. Every extra percent in fees is a percent that can't compound.

6. Tune out the noise. Check your accounts less, not more. Most financial news exists to trigger your biases.

7. Focus on what you can control. Your savings rate, cash flow, behavior, and long-term financial plan.

Closing the Gap

The real goal is to close the behavior gap—to capture your investment's actual return, not the diminished return that comes from poor behavioral decisions. That's where long-term results are built, and that's how real wealth is created.

Understanding these biases isn't about perfection. It's about awareness. When you recognize these patterns in yourself, you can build better systems and ultimately keep more of what the market has to offer.

‍