Citi Wealth has published a report identifying six cognitive biases that undermine investor outcomes and distort portfolio decisions over extended periods. The average equity fund investor earned 16.54% in 2024, while the S&P 500 returned 25.02% during the same period, according to DALBAR’s 2025 Quantitative Analysis of Investor Behavior. The report identifies these biases as one of the most damaging ones, which often occur when investors feel the sting of a $5,000 portfolio loss far more intensely than the satisfaction of a gain in their account. The firm also highlighted the endowment effect, which inflates perceived value beyond fair market value. The final bias is the tendency to underestimate the potential for negative outcomes from your investments or portfolio allocation strategy. The financial damage from these biases is not theoretical, but not theoretical.