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Ep.223 The Endowment Effect: Why You Overvalue What You Own
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The Endowment Effect: Why You Overvalue What You Own
You list your old chair on Facebook Marketplace for $200.
Everyone offers $50.
You think, “This is a steal—why don’t they see it?”
That’s the endowment effect—a mental bias where we overvalue what we already own, just because it’s ours.
It shows up in investing too:
- You keep a bad stock because “it’ll bounce back.”
- You hold a business idea long after it stopped working.
The fix?
Ask yourself: If I didn’t own this already, would I buy it today?
If the answer is no, it’s probably time to let go.
Smart investors don’t get attached.
They get objective.
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