Friday, May 25, 2018

Behavioral Bias: Cognitive Versus Emotional Bias in Investing

"Everybody has biases. We make judgments about people, opportunities, government policies and, of course, the markets. When we analyze our world without knowing about these biases, we put our observations through a number of filters manufactured by our experiences, and we're not just talking about stock screeners.
We're talking about the filters we put our decisions through that sometimes make them biased. Day-to-day activities are primarily driven by behavioral patterns. The same behavioral patterns also guide investing actions.
It’s impossible to be unbiased in our decision-making. However, we can mitigate those biases by identifying and creating trading and investing rules – but only if we know what to look for."
Read more here.

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