Investment risk, Maslow's hammer and cognitive bias. Illustration of man walking on stilts, pink background.
Back to Market and Insights

What has investment risk and Maslow’s hammer got to do with investing?

04th October, 2021

Famous American psychologist, Abraham Maslow, coined the phrase “If all you have is a hammer, everything looks like a nail” to explain when cognitive bias leads us to become over-reliant on a familiar tool. But what does that have to do with investing and how we view risk? 

Relying on familiarity can mean not seeking alternatives, and when we consider this in relation to how we measure investment risk, distilling risk to a single number is volatility. To view risk as volatility and short-term loss can result in a fairly narrow view of the investment landscape.

Watch the video to see Gary Connolly, Head of Investment Advisory, Davy, explain why perspective and how understanding that risk is broader than volatility and short-term capital loss is key to the investment decisions you make.

 

Share this article

Other articles you may like