How behavioural biases affect investment decisions?

[Good-Person]

Behavioural biases refer to a kind of behaviour where the decisions of any kind of investors are affected by certain kinds of factors. This may include certain factors such as fear, greed, etc. However, behavioural biases does not only include this alone. This may also include many other factors as well. So, what is the role of behavioural biases?

 

[ganibade]

Behavioural biases refer to a kind of behaviour where the decisions of any kind of investors are affected by certain kinds of factors. This may include certain factors such as fear, greed, etc. However, behavioural biases does not only include this alone. This may also include many other factors as well. So, what is the role of behavioural biases?

Investment choices can be greatly impacted by behavioral biases. Overconfidence, loss aversion, and herd mentality are common biases that can cause impetuous trading, ignore diversification, or respond emotionally to market volatility, which ultimately has an impact on the performance of a portfolio and long-term financial objectives. Sound investment methods must be able to identify and counteract these biases.