If you think your clients are rational investors, think again. You can help them manage their bad behaviours and achieve better results.
Many of the theories I grew up with—efficient market hypothesis; modern portfolio theory; and the theory that investors always choose the outcome with the greatest reward—were inherently flawed. I have realized markets and people are irrational.
Two of the precepts of behavioural finance are overreaction and availability bias. Studies have shown we overreact to newer information, both good and bad.