The 5 Ways Investors Behave When Things Go Wrong, with Clare Flynn Levy

Clare Flynn Levy, a former hedge fund manager, draws on her experience during the 2007 financial crisis to explain common investor behaviors. She discusses two specific biases—sunk cost fallacy and the endowment effect—and shares a personal story about moving her kids' college funds after the 2024 election and later reviewing her thesis. Clare introduces five investor archetypes when things go wrong: Connoisseurs, Raiders, Rabbits, Hunters, and Assassins, with most people defaulting to rabbit-like paralysis or impulsive buying. She offers a practical rule: don't let any single position drag your portfolio down more than 1% before reassessing, and advises writing down your reasoning before every major move so you can evaluate decisions objectively later.