The preference for the current state of affairs over change — manifesting as reluctance to make portfolio changes even when analysis clearly indicates they are warranted.
Deeper Explanation
Status quo bias combines inertia with loss aversion: changing feels risky even when the expected return from changing is clearly superior. For investors, it means holding a deteriorating position because selling requires a decision, while doing nothing feels passive. Annual portfolio reviews become exercises in justifying what already exists rather than a clean-sheet assessment of optimal allocation. The correction: at regular intervals, ask "if I were building this portfolio from scratch today with a blank slate, would I own each of these positions in these proportions?" Any position you would not add fresh deserves scrutiny.
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