Impact on Investing: Investors afflicted with recency bias become over-optimistic following a time of rising markets or, conversely, over-cynical after a downturn in markets. For instance, after experiencing a rally... Read More
Author: fbs10
Confirmation Bias: Ignoring Contradictory Information Confirmation bias is the tendency to seek information that agrees with what you already believe or hear, while ignoring information that goes against your beliefs.... Read More
include the dot-com bubble of the late 1990s and the housing bubble of the mid-2000s. When the bubble bursts, many investors face significant losses. include the dot-com bubble of the late... Read More
Impact on Investing An investor may purchase a stock at $100 per share and refuse to sell the stock even if it decreases to $50 per share; they are anchored... Read More
Anchoring: Relying Too Much on Initial Information Anchoring is when an investor focuses on an initial piece of information, for example, the price at which they bought an investment, and allows... Read More
market or select the "perfect" stock, leading to poor decision-making and underperformance. It also leads to an avoidance of diversification, assuming that the chosen stocks will always outperform. market or select... Read More
might be overly cautious and avoid any higher-risk but potentially more rewarding assets. might be overly cautious and avoid any higher-risk but potentially more rewarding assets. might be overly cautious and avoid... Read More
Fear : Fear can cause investors to act rashly, such as selling off stocks in a panic, when markets are down or there is uncertainty (such as during a financial... Read More
psychological biases that investors need to be aware of and how emotions impact financial decisions. The Two Main Emotions in Investing: Fear and Greed Two of the most powerful emotions influencing investment... Read More
of the strong emotions that can influence our investment decisions and frequently cause us to make bad financial choices. For instance, we might be eager to invest when the market is... Read More