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Emotional pitfalls to avoid in investment decision making
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1. Confirmation bias
We all tend to seek for info that support our beliefs or conclusions
Sometimes it leads to neglecting true info that doesnât support our decisions
Be cautious of this during investment
Look for balanced data and opinions
We all tend to seek for info that support our beliefs or conclusions
Sometimes it leads to neglecting true info that doesnât support our decisions
Be cautious of this during investment
Look for balanced data and opinions
2. Recency bias
We all know this too well
If the market has crashed recently, majority think it will happen again & vice versa
Donât think about market rises & crashes all the time
Remember
Time in the market > Timing the market
We all know this too well
If the market has crashed recently, majority think it will happen again & vice versa
Donât think about market rises & crashes all the time
Remember
Time in the market > Timing the market
3. Follow the crowd instinct
Investors are likely to follow the crowd
Either investing in rising bull or running from bear leading to huge sell-offs or buying
Think logically & analytically before making investment decision
Make decision based on data & donât follow the crowd
Investors are likely to follow the crowd
Either investing in rising bull or running from bear leading to huge sell-offs or buying
Think logically & analytically before making investment decision
Make decision based on data & donât follow the crowd
4. Choices overload
We all assume the more choices the better is it
But it causes confusion in investment due to info overload
We may end up taking forever to make decision resulting in lost opportunities
Having a handful of choices > tons of choices
Aim for moderation
We all assume the more choices the better is it
But it causes confusion in investment due to info overload
We may end up taking forever to make decision resulting in lost opportunities
Having a handful of choices > tons of choices
Aim for moderation
Be in control of your emotions while making huge investment decisions
Think with clear & logical mind
Think with clear & logical mind
