How “The Law of the Instrument” Punishes Stubborn Investors
When all you have is a hammer, everything looks like a nail.
Published in
3 min readSep 6, 2019
In this article, we’ll cover the law of the instrument — one of the biggest mental shortfalls in all of investing (and life).
Author’s Note: This article is part of my series on investing psychology:
The Law of the Instrument — What is it?
The law of the instrument describes an investor’s tendency to overly rely on familiar tools, methods, or strategies while undervaluing other approaches.
This bias is commonly known as, “If all you have is a hammer, everything looks like a nail.”
How does the law of the instrument apply to investing?
It’s human nature to reach for the tools we know best. And in many cases, it’s wise to wield the tool we’re most familiar with.
But when it comes to stock market investing, there’s great risk in becoming overly…
