📅 Last updated: 8 May 2026
· 🏷 Topic: Behavioural finance, biases, FOMO, loss aversion, market timing
· 🇧🇪 For: Belgian private investors
What you will learn
- The six most impactful psychological biases that trip up investors
- Why Belgian investors have historically shown a savings account and property bias
- How dollar-cost averaging protects you from your own emotions
- Concrete countermeasures you can apply right now
1. Loss aversion
Loss aversion is the phenomenon whereby the pain of a €100 loss is experienced as approximately twice as intense as the pleasure of a €100 gain (Kahneman & Tversky, prospect theory, 1979).
How it manifests in investing:
- You sell too quickly as soon as a share shows a small profit — to “lock in the gain”. But you hold your losing positions far too long because you don’t want to realise the loss (the “disposition effect”).
- You sell in panic during a market downturn — locking in the loss — and then often miss out on re-entering at a higher price.
Practical effect: investors who trade actively have historically underperformed those who simply leave their portfolio alone (Barber & Odean studies).
2. FOMO and herd mentality
FOMO (Fear Of Missing Out) — the urge to join in because everyone else is doing it.
Herd mentality — collective behaviour whereby investors buy or sell together, without any fundamental basis.
Classic examples:
- Crypto rally 2017–2018, GameStop short squeeze 2021, generative-AI stocks 2023–2024.
- Belgian crypto search queries historically peak when Bitcoin is ~+60% YTD — after the rise, not before.
- “Friends made a fortune on X” is rarely followed by “friends lost everything on Y” — survivorship bias in the stories we tell.
💡 The FSMA regularly warns against unregistered crypto platforms that exploit FOMO with “guaranteed” returns or social-media influencer promotions.
3. Recency bias and confirmation bias
Recency bias — you give recent events more weight than older ones.
- After a good stock-market year, everyone feels clever. After a crash, everyone thinks equities are “too risky” — right at the moment when the market is often most attractive.
- Anyone who saw their bond ETFs drop 15% in 2022 lost trust in bonds — just before a strong rebound in 2024–2025.
Confirmation bias — you unconsciously seek out information that confirms your existing beliefs and ignore counterarguments.
- Crypto-convinced investors follow only pro-crypto voices on Twitter.
- Anyone convinced that “AB InBev always comes back” looks for news that supports the thesis.
Countermeasure: actively read the counterarguments to your position. Not to discourage yourself — but to spot your blind spots.
4. Overconfidence
Research shows that 74% of investors rate themselves as “above average” — mathematically impossible (Glaser & Weber, 2007). The more experience someone has, the more often this occurs.
Practical consequences:
- Too-high concentration in “certain winners” — often the employer’s share or a popular tech stock.
- Trading too frequently — higher costs, lower net return.
- Underestimating “what I don’t know” — the blind spot where danger lurks.
⚠️ Research (including the annual SPIVA study) shows that the majority of professional active fund managers fail to beat the index over the long term. Retail investors manage it even less often on average. The problem is not a lack of intelligence — it is that the market already aggregates a great many intelligent people and the winner is whoever beats that collective.
5. Anchoring and mental accounting
Anchoring — an arbitrary number influences your judgement.
- The share was €100 — now it’s €70. “It will get back to €100” is anchoring. It could equally fall to €50.
- A fund returned 12% last year — you expect “something like” 12% this year. Last year’s return is an anchor, not a predictor.
Mental accounting — you treat money differently depending on where it came from.
- “Bonus money” is spent differently from “salary”. Both are fungible but feel different.
- Someone with €50,000 in savings and €30,000 in mortgage debt often feels at ease mentally (“I have €50k saved”), while a net worth of €20,000 is financially more vulnerable than someone with no debt and €25k.
6. The Belgian context: savings account bias, property bias, home bias
Belgian private investors display some striking collective biases:
Savings account bias:
- Belgium has historically had one of the highest savings rates in the world.
- Many Belgian households hold €50,000+ in a savings account whose real return (after inflation) is negative.
- The regulated savings account feels “safer” than investing — which is true in the short term, but is guaranteed to lose to inflation over the long term.
Property bias:
- Belgium has the highest home ownership rate in the eurozone (~72%).
- Many households have their largest asset concentrated in a single property — extreme concentration.
- “Property prices can’t fall” is a typical belief — historically disproved (Belgian residential prices fell 5–10% in 2008–2009 and briefly after 2022).
Home bias:
- Belgian investors hold on average 30–50% Belgian equities in their portfolio — while Belgium represents ~0.2% of global market capitalisation.
- The reason: familiarity (KBC, AB InBev as recognised names). But familiarity is not safety — KBC fell by -90% in 2008.
7. Practical countermeasures
Measure 1 — Automate. Set up a monthly automatic contribution to your investment. No decision each month = no emotion each month. Dollar-cost averaging smooths out market-timing mistakes.
Measure 2 — Write down your investment plan. A simple document: goal, time horizon, asset allocation, rebalancing rules, selling rules. Written down, they are stronger than remembered. Read it before you change anything.
Measure 3 — Limit how often you look. Those who read quarterly figures often achieve better results than those who check their portfolio every day. Daily fluctuations are noise, not signal.
Measure 4 — Diversify across asset classes, not just equities. Equities + bonds + real estate (via GVV/ETF) + cash. No overlay of Belgian equities + Belgian government bonds + Belgian real-estate funds — that is not diversification.
Measure 5 — Factor in costs and taxes. A 1% per year difference in TER over 30 years equals roughly 25% less final capital. Tax-efficient investing is a bigger source of return than clever stock selection.
Measure 6 — Acknowledge survivorship bias. Stories of those who succeeded are always more visible than stories of those who lost. For every crypto millionaire there are 100 crypto bag-holders you never hear from.
Sources & further reading
- Kahneman, D. & Tversky, A. — Prospect Theory: An Analysis of Decision under Risk (1979) — foundational paper
- Barber, B. & Odean, T. — Trading Is Hazardous to Your Wealth (2000)
- SPIVA Europe — Active vs. passive: annual study
- FSMA — Warnings against unregistered providers
- Wikifin — Behavioural biases in investing
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