It’s All About Risk Bruce Schneier, an author who wrote about how we perceive danger, outlined cognitive biases people fall victim to when making decisions about risk (Housel, 2011). Although general in nature, they apply to investing, specifically diversifying, or the lack there of. The unknown is perceived to be riskier than the familiar. Schneier’s example: “People fear kidnapping by strangers when the data supports kidnapping by relatives being much more common.” In investing: The Flash Crash in 2010 caused untold anxiety. Years later, it is still frequently mentioned as a serious risk to markets. In reality, though, it was…