Diversification of investments is just another area that the behavioural finance stream looks into. Loss aversion makes many investors so averse to risk that they will only accept low-yielding "safe" investments that don't have a prayer of growing enough to last an actuarial lifetime. But the other extreme makes you overconfident and invest too aggressively. What behavioural finance offers is the middle ground: you diversify your risk across all the different types of investments-from stocks to bonds to real estate, and so on.
