Latest topics
"Confirmation bias can create problems for investors"
Page 1 of 1
"Confirmation bias can create problems for investors"
DEFINITION of 'Confirmation Bias'
A psychological phenomenon that explains why people tend to seek out information that confirms their existing opinions and overlook or ignore information that refutes their beliefs. Confirmation bias occurs when people filter out potentially useful facts and opinions that don’t coincide with their preconceived notions. It affects perceptions and decision making in all aspects of our lives and can cause us to make less-than-optimal choices. Seeking out people and publications with different opinions than our own can help us overcome confirmation bias and make better-informed decisions.BREAKING DOWN 'Confirmation Bias'
Confirmation bias can create problems for investors. When researching an investment, someone might inadvertently look for information that supports his or her beliefs about an investment and fail to see information that presents different ideas. The result is a one-sided view of the situation. Confirmation bias can thus cause investors to make poor decisions, whether it’s in their choice of investments or their buy-and-sell timing.For example, suppose an investor hears a rumor that a company is on the verge of declaring bankruptcy. Based on that information, the investor is considering selling the stock. When he goes online to read the latest news about the company, he tends to read only the stories that confirm the likely bankruptcy scenario and he misses a story about the new product the company just launched that is expected to perform extremely well. Instead of holding the stock, he sells it at a substantial loss just before it turns around and climbs to an all-time high.
Confirmation bias is a source of investor overconfidence and helps explain why bulls tend to remain bullish and bears tend to remain bearish regardless of what is actually happening in the market. Confirmation bias helps explain why markets do not always behave rationally. However, an investor who is aware of confirmation bias may be able to overcome the tendency to seek out information that supports his existing opinions and intentionally seek out contradictory advice.
http://www.investopedia.com/terms/c/confirmation-bias.asp
*****************
>>>TNTBS's YouTube Channel<<<
RamblerNash- GURU HUNTER
- Posts : 24270
Join date : 2015-02-19
Page 1 of 1
Permissions in this forum:
You cannot reply to topics in this forum
Yesterday at 6:02 am by Ditartyn
» Dave Schmidt - Zim Notes for Purchase (NOT PHYSICAL NOTES)
Sat Mar 23, 2024 9:25 am by swizzlestick
» ZIGPLACE
Wed Mar 20, 2024 6:29 am by Zig
» CBD Vape Cartridges
Thu Mar 07, 2024 2:10 pm by Arendac
» Classic Tony is back
Tue Mar 05, 2024 2:53 pm by Mission1st
» THE MUSINGS OF A MADMAN
Mon Mar 04, 2024 11:40 am by Arendac
» Minister of Transport: We do not have authority over any airport in Iraq
Mon Mar 04, 2024 11:40 am by Verina
» Did Okie Die?
Mon Mar 04, 2024 11:34 am by Arendac
» Hello all, I’m new
Wed Jan 31, 2024 8:46 pm by Jonny_5
» The Renfrows: Prophets for Profits, Happy Anniversary!
Wed Jan 31, 2024 6:46 pm by Mission1st
» What Happens when Cancer is treated with Cannabis? VIDEO
Wed Jan 31, 2024 8:58 am by MadisonParrish
» An Awesome talk between Tucker and Russell Brand
Wed Jan 31, 2024 12:16 am by kenlej
» Trafficking in children
Mon Jan 29, 2024 7:43 pm by kenlej
» The second American Revolution has begun, God Bless Texas
Mon Jan 29, 2024 6:13 pm by kenlej
» The Global Currency Reset Evolution Event Will Begin With Gold, Zimbabwe ZWR Old Bank Notes
Sun Jan 28, 2024 3:28 pm by Mission1st
» Tucker talking Canada
Wed Jan 24, 2024 6:50 pm by kenlej
» Almost to the end The goodguys are winning
Mon Jan 22, 2024 9:03 pm by kenlej
» Dinar Daily Facebook Page
Mon Jan 22, 2024 3:34 pm by Ponee
» The Fundamentals of Finance and Pimpy Live
Thu Jan 18, 2024 7:17 am by Dinarhater
» Why Won't the Iraqi Dinar Scam Die?
Wed Jan 17, 2024 5:19 pm by RamblerNash