In the grand scheme of investing, behavioral risk is second to none on the list of pitfalls that threaten to derail the best-laid plans for investing. The challenge is especially acute in the thankless task of trying to anticipate how you’ll react when a rough patch arrives. The mystery is all the deeper if your only experience with a fund or strategy is holding it during a bull market. There are no easy solutions to this problem, but you can start to chip away at the uncertainty with a simple round of econometric analysis that focuses on return distributions.

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