Final answer:
Robert's investment behavior indicates overconfidence in the emerging markets, confirmation bias by focusing on selective information, and representativeness heuristic by predicting future success based on past performance.
Step-by-step explanation:
Robert has a portfolio of around $100,000 which he invests in a highly concentrated emerging markets mutual fund. He strongly believes that the emerging markets are the places to be for making money. This investment strategy reflects a combination of behaviors related to investment psychology.
One possible behavioral aspect that Robert is exhibiting is overconfidence. This is evident in his unwillingness to diversify and his strong belief in the success of emerging markets based on past performance. Overconfidence can lead investors to underestimate risks and overestimate their ability to predict market movements, ignoring the potential benefits of diversification.
Another aspect could be 'confirmation bias,' where Robert is focusing on information that supports his existing beliefs (the growth rate of his portfolio) and ignoring information that contradicts his investment strategy (the risk of lack of diversification). This bias can lead to a less than optimal investment decision because it disregards the complete range of information needed for balanced investment decisions.
Lastly, Robert's behavior might also be a case of 'representativeness heuristic,' where he generalizes the success of emerging markets in the past to predict future success, potentially overlooking the cyclical nature of stock market returns and the particular risks associated with individual market sectors.