The world is incredibly complicated. We are constantly being presented with new information and we have to subconsciously process it all as quickly as possible. In order to do so, our brain uses shortcuts – which we call heuristics and biases. While these mental tricks are incredibly useful and accurate 95% of the time, the other 5% of the time the heuristics and biases we use can greatly hurt us. Guarding yourself against yourself is probably one of the most important things you can do in the world of investing. One example is Choice-Supportive Bias. This is one that should seem familiar. Think about how people root for their favourite sports team or back up their political stances. They drastically over weigh the positives and drastically under weigh the negatives. Once a person becomes a regular customer for a particular product, as long as nothing drastically changes about that product, they’ll keep using it and recommending it to others even if a better competitor comes on the market. See the full list: (VIEW LINK)
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