What goes up…

What goes up… must come down. All of us have experienced that, it is called gravity. When you throw a ball in the air, you expect it to come down. The same principle applies to the market, but we tend to forget it.I have posted a few articles on how our mind and...

Representativeness

Representativeness is another cognitive error that can impair your decision making. Simply stated, it is when you classify new information based on past categories and you misestimate probabilities. Does it sound complicated? Let me better explain with an example, the...

Availability

Availability is another member of the long list of cognitive errors that can affect your trading and investing performance. This happens because people are more likely to remember events that are recent, easy to remember, or relevant to them. For example, in a famous...

Conservatism

Conservatism is an example of a cognitive error that can affect your decision-making process. How? It happens when one maintains his/her prior view by inadequately incorporate new information. This, as you may already have realized, can be very dangerous when it...

Regret-aversion bias

The regret-aversion bias is related to another emotional bias we have discussed recently, i.e., the loss-aversion bias.Have you ever avoided to make a decision out of fear that it will turn out to be a bad decision? Yes? Then you are a victim of the regret-aversion...

Self-control bias

The topic this time is the self-control bias, that like the loss-aversion bias belongs to the emotional biases category.The self-control bias identifies a situation where people cannot achieve their long-term goals for a lack of self-discipline. The classic example is...