Emotional Detachment and Rational Decision-Making;- That is how to invest effectively:- learning emotional control in the investment process. It is through successful investing that individuals are able to make cool-headed decisions,... Read More
Author: fbs10
Effects on Investing:- Negative news or a market drop will cause most investors to panic and sell out in fear at the worst time possible. Conversely, good news causes overenthusiasm,... Read More
underperforming assets or portfolio diversification, thus making less-than optimal investment decisions. Overreaction to News and Market Movements Investors tend to overreact to news and short-term market movements and, therefore, make emotional decisions... Read More
Effect on Investment:-Investors hold onto stocks or other assets due to the sheer fact that they own them, not necessarily because they have good reason to. This tends to prevent... Read More
The Endowment Effect: Valuing What You Own More Than What It's Worth The endowment effect is a psychological bias in which individuals tend to overvalue what they possess relative to what... Read More
experiencing a rally in markets, one would expect constant gains; conversely, after witnessing a market crash, fear will dominate investment decision-making to the extent of not making an investment, even... Read More
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 Impact on Investing:... Read More
Recency Bias: Overestimating Recent Events Recency bias means assigning more importance to the most recent events, with an assumption that these will continue in the future. Recency Bias: Overestimating Recent Events Recency bias... Read More
to sell or reposition their strategy. It further entrenches bad decisions on investments by ignoring relevant information that would call for a change of direction. to sell or reposition their strategy.... Read More
Impact on Investing: Investors would only hear good news about a particular stock or investment they are holding while ignoring bad news or warnings. This prevents one from realizing when... Read More