Are you overthinking your investments? We'd never advise you to make money decisions without some careful consideration. But according to the American Association of Individual Investors (AAII), even the most well-adjusted investors fall victim to mind games.

Confidence can be healthy. Who wants to doubt their own abilities or suspect that the pro they hired isn't one of the best in the field? Overconfidence, however, can lead to excessive trading and diminished returns. If you find yourself making hair-trigger investing decisions -- based on advice, your own inklings, or the promise of "the next big thing" -- that tend to go poorly, give yourself a trading waiting period.

Fear of regret nips at the heels of those in the overconfidence camp. Investors who give too much weight to potential feelings often make poor decisions, such as holding on to losing stocks (to put off having to admit the boo-boo) or selling their winners too soon (to prematurely celebrate victory and remove the potential for defeat). How do you face this fear? With perspective, advises AAII: "Convince yourself that unrealized losses in your portfolio are the same as realized losses."

If you tend to cover your ears and say "la la la la la" when the talking heads deliver bad news about a company in your portfolio, you might be suffering from cognitive dissonance. The natural reaction is to ignore or discount information that conflicts with what you believe. Some people call this "ignoring the danger signs." Remove the emotion from your buy, hold, and sell decisions by writing out why you purchased a stock in the first place and reevaluate the reasons whenever facing an opposing viewpoint. Value investors exploit the fearful, looking for solid companies that others are fleeing in the short-term. They call it "buying when blood is in the street." And as fellow Fool Richard Gibbons pointed out recently, buying when companies like Citigroup (NYSE:C), Altria (NYSE:MO), Simon Property Group (NYSE:SPG) and Johnson & Johnson (NYSE:JNJ) were in crisis turned out to be quite lucrative.

With the advent of instant information, many investors concentrate too much on the day-to-day and hour-to-hour portfolio goings-on, attaching a psychological anchor to a short-term situation. Show of hands: Who here has dumped a stock because of reports of soft sales, squeezed margins, or just a bad gut feeling? And show of hands by those who missed a subsequent run-up when the company fixed the problem? Remind yourself regularly that investing works out better when it's a long-term process. Emphasizing short-term events over the long-term ones will only blur your investing objectives.

Similarly, concentrating on the short-term consequences of a potential loss or gain -- myopic risk aversion in shrinkspeak -- can shortchange your future. If you avoided putting any of your retirement dollars in the stock market (which can look downright stormy through a short-term lens), your retirement kitty won't even survive the ravages of inflation. Study history -- and historic returns -- and keep long-term considerations in your line of sight. If you find it too difficult to get your head out of the game, you can, as my colleague Selena Maranjian points out, fool yourself into saving more.

When one thing looks a lot like the other, the mind tends to take a mental leap and assume that the two are nearly identical. Representativeness, as the shrinks call it, can be dangerous to your returns since a few similar characteristics of, say, a mutual fund, can be shared by vastly different investments. For example, two small-cap funds may boast similar returns, but if one is classified as a "value" fund it may actually have performed much better on a relative risk basis, or compared to its value peers, than similar returns from a higher-risk "growth" fund. Avoiding costly shortcuts and looking at all available variables will help you find true gems.

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Dayana Yochim owns none of the companies mentioned in this article. The Fool has a disclosure policy .