INVESTMENT BIAS
LEAVE THESE BAGGAGE OF BIASES BEFORE MAKING INVESTMENT
Published By Livemint
| 07 Feb, 2023
Stock market investment requires careful analysis and transparency in information
At times stock market decisions are also affected by different types of biases
Know about 7 common biases of investors that can impact their investment decisions
Tendency to rely on details that confirms one’s existing beliefs
Confirmation bias
Habit of relying too much on first piece of information. Results in overvaluing/undervaluing investments
Anchoring bias
People often follow others in making investments even without doing research
Herd mentality
Tendency to treat money differently depending on where it came from, and its use
Mental accounting
Tendency of making conclusions based on recent events, happens with investors without existing belief
Recency bias
Causes overconfidence, as investors acquire too much faith on their prediction about stock performance
Hindsight bias
Investors stick with a losing stock,as they have already invested heavily in it
Sunk Cost Fallacy