Behavioural finance

• Anchoring and adjustment bias. The price at which you bought a stock is irrelevant.
• Conservatism bias. Being stubborn may help in everyday life but not in asset allocation.
• Availability bias. Be afraid of coconuts, not sharks.
• Hindsight bias. Was the market correction of 2022 a negative surprise for your asset allocation strategy, or did you ‘know it all along’?
• Outcome bias. A ‘hot’ trade idea may be just a bubble about to burst.
• Framing bias. Your risk appetite is manipulated by how the broker’s questionnaire is worded.
• Self-attribution bias. Not all successful trade ideas are thanks to your genius, and not all failures are due to external risk factors.
• Regret aversion bias. Complete avoidance of investment risks is as harmful as excessive risk-taking.
• Representativeness bias. Your mind classifies new information using familiar analogies. However, it increases your portfolio’s investment risks.
• Self-control bias. A $50,000 SUV will cost you $872,000 without a proper asset allocation strategy.
• Status quo bias. What do you do when your trade idea goes wrong?
• Confirmation bias. Can Elliot waves reveal sacred signals to achieve your financial goals?
• Recency bias. Risk analysis of the longer-term data makes sense, doesn’t it?
• Illusion of control bias. The truth is that no one can control the market; a blind belief that you are The One renders your investment goals unreachable.
• Cognitive dissonance bias. When new information conflicts with the prior investment decision, smart investor acknowledges it. Do you?
• Affinity bias. After all, are your financial goals about supporting the company’s attractive social image or earning money?
• Mental accounting bias. In asset allocation, all baskets of eggs are equal.
• Loss aversion bias. Your risk appetite is around 2:1.
• Overconfidence bias seriously affects your investment decisions and undermines financial goals
• Behavioural economics for smart investment and risk-aware portfolio management