This is the third part of a series that looks at various behavioural traits and biases.
These biases could trip up your investment process and render your performance less than ideal.
This list is taken from the book “The Art of Thinking Clearly” by Rolf Dobelli.
You can check out Parts 1 and 2 HERE and HERE.
Here are three more phenomena that investors should take note of.
6. Outcome bias
Outcome bias describes a situation where investors judge the quality of a decision when the outcome is already known.
They also tend to place too much emphasis on this outcome.
You can call outcome bias the cousin of hindsight bias, which makes investors think they know what will happen before it even happens!
As investing often requires decision-making under conditions of uncertainty, randomness often plays a role in determining certain outcomes.
Remember too that probabilities also play a role in mapping out a whole range of expected outcomes, and these may be too...