In order to make better decisions, we need to be keenly aware of the biases that affect our decision making. Here are three that every investor should constantly bear in mind.
1. Confirmation bias.
Let’s face it. We all want to be right as often as possible. No one enjoys being told that they are wrong. Nobody likes to read about things that could imply that they are wrong. None of us ever want to be wrong, if we can possibly help it. Beside the psychological feel good factor about being right, being right is also economical on the thought process. Being right is the end game, but being wrong implies that there is a ‘Right’ out there waiting for us to recognize and process. It is tiring to be wrong, or even to entertain that thought that we could possibly be wrong.
Hence the confirmation bias. We seek out …