10 cognitive biases that can lead to investment mistakes (Part One)
To be a successful investor over the long term, we believe it is critical to understand, and hopefully overcome, common human cognitive or psychological biases that often lead to poor decisions and investment mistakes.
Cognitive biases are ‘hard wired’ and we are all liable to take shortcuts, oversimplify complex decisions and be overconfident in our decision-making process.
Understanding our cognitive biases can lead to better decision making, which is fundamental to lowering risk and improving investment returns over time.
Take a look at part one outlining the first 5 key cognitive biases that can lead to poor investment decisions. The remaining five cognitive biases will be covered in part two.