14 Cognitive Biases Impacting Your Investment Choices

In the realm of investments, we often feel like sailors navigating treacherous waters. The decisions we make can either safeguard our financial voyage or put it at risk.

But what if I told you that lurking beneath the surface are hidden biases, quietly steering our course towards unintended destinations?

Yes, my friends, we must confront the 14 cognitive biases impacting our investment choices. These biases, deeply rooted within us, have the power to cloud our judgment and lead us astray.

From the overconfidence bias that inflates our ego, to the confirmation bias that blinds us to contradictory evidence, each bias holds the potential to derail our financial success.

So let us embark on this journey of self-awareness and unravel the intricate web of biases that shape our investment decisions.

Key Takeaways

• Overconfidence Bias can lead to taking on higher risks and negligence in research, impacting investment decisions.
• Confirmation Bias can result in a narrow understanding of the investment landscape and overconfidence in decisions.
• Availability Bias plays a significant role in shaping investment decisions and distorts perception of risk and return.
• Emotional biases such as Loss Aversion Bias and Herding Bias can impact investment decisions and lead to impulsive decision-making based on fear or following the crowd.

Overconfidence Bias

The Overconfidence Bias affects our investment choices by leading us to have an exaggerated sense of our own abilities and knowledge. This bias causes us to believe that we’re more skilled and knowledgeable than we actually are, leading us to make overconfident investment decisions.

When it comes to investment strategies, the overconfidence bias can have detrimental effects. It can lead us to take on higher risks than necessary, as we believe we’ve a greater understanding of the market than we actually do. This can result in poor investment performance and potential financial losses.

Additionally, the overconfidence bias can cause us to be less cautious and diligent in our investment research. We may rely too heavily on our own opinions and ignore important information or warning signs. This can lead to missed opportunities or investing in assets that are fundamentally flawed.

To counteract the overconfidence bias, it’s important to approach investment decisions with a healthy dose of skepticism and humility. It’s crucial to recognize our limitations and seek out diverse perspectives and expert opinions. By embracing a more objective and analytical approach, we can make more informed and rational investment choices.

Confirmation Bias

Confirmation Bias influences our investment choices by causing us to selectively seek out and interpret information that confirms our preexisting beliefs and assumptions. This bias can have a significant impact on our decision-making process and can lead to poor investment outcomes if not recognized and addressed.

Overcoming confirmation bias requires a conscious effort to challenge our own beliefs and actively seek out information that contradicts our initial assumptions. This can be done by diversifying our sources of information, seeking out alternative perspectives, and engaging in critical thinking. By actively seeking out opposing viewpoints and considering different arguments, we can reduce the influence of confirmation bias on our decision-making process.

The impact of confirmation bias on our investment decisions is twofold. Firstly, it can lead to a narrow and limited understanding of the investment landscape, as we only focus on information that supports our existing beliefs. This can prevent us from considering alternative investment opportunities or adjusting our strategies based on new information.

Secondly, confirmation bias can lead to overconfidence in our investment decisions, as we tend to place more weight on information that confirms our beliefs, while disregarding contradictory evidence.

Availability Bias

When it comes to making investment choices, our memory and decision-making processes can be influenced by availability bias. This cognitive bias occurs when we rely on information that’s readily available to us, rather than considering all relevant data.

This can lead us to make financial decisions based on recent events or vivid examples, rather than a comprehensive analysis of the market.

To overcome availability bias, it’s important to actively seek out a wide range of information and consider multiple perspectives before making investment choices.

Memory and Decision-Making

In our investment choices, we often rely on the availability bias, which leads us to make decisions based on the most easily accessible information in our memory. This cognitive bias can have a significant impact on our financial choices.

Here are four ways in which memory and decision-making biases can affect our investment decisions:

1. Selective retrieval: We tend to remember information that confirms our existing beliefs or expectations, leading us to overlook contradictory evidence.
2. Recency effect: Recent events or news tend to have a stronger influence on our decisions, even if they may not accurately reflect the long-term prospects of an investment.
3. Vividness bias: We’re more likely to recall and give greater weight to vivid or emotionally charged memories, which can skew our investment decisions.
4. Availability heuristic: We gauge the likelihood of an event based on how easily we can recall similar instances, often overestimating the probability of rare occurrences.

Understanding how memory biases influence our decision-making process is crucial for making more informed investment choices. These biases can lead us to rely on incomplete or inaccurate information, potentially impacting our financial outcomes.

Impact on Financial Choices

As we delve into the impact of cognitive biases on our financial choices, we find that the availability bias plays a significant role in shaping our investment decisions.

The availability bias refers to our tendency to rely on information that’s readily available to us when making decisions, rather than seeking out a more comprehensive and accurate picture.

In the context of finance, this bias can lead us to make choices based on recent or easily accessible information, rather than considering a broader range of factors.

This can result in a distorted perception of risk and return, as well as missed opportunities for diversification.

Being aware of the impact of availability bias on decision making is crucial for investors, as it allows us to actively seek out additional information and consider a wider range of options before making investment choices.

Overcoming Biased Judgments

To overcome biased judgments caused by the availability bias, we actively seek out additional information and consider a wider range of options before making investment choices. By employing effective decision-making strategies, we can mitigate the impact of cognitive biases and make more informed investment decisions. Here are four strategies to help overcome biased judgments:

1. Diversify our information sources: Relying on a single source of information can limit our perspective. By seeking out diverse and reliable sources, we can gather a broader range of information to make a more balanced decision.
2. Challenge our assumptions: Availability bias often stems from our tendency to rely on readily available information. By actively questioning our assumptions and seeking evidence to support or refute them, we can avoid making decisions based solely on easily accessible information.
3. Consider alternative perspectives: Engaging with diverse viewpoints can help us overcome the limitations of the availability bias. By actively seeking out and considering alternative perspectives, we can gain a more comprehensive understanding of the investment landscape.
4. Conduct thorough research: Investing requires careful analysis and research. By dedicating time and effort to thoroughly researching investment options, we can make decisions based on a solid foundation of knowledge and reduce the influence of availability bias.

Anchoring Bias

When it comes to making investment choices, the anchoring bias can have a significant impact. This cognitive bias occurs when we rely too heavily on the initial information we receive, leading to a distorted decision-making process.

Our tendency to anchor our decisions to a specific reference point can cloud our judgment and ultimately affect our investment outcomes.

Influence of Initial Information

Our decision making is often influenced by our initial information, leading to anchoring bias in our investment choices. Understanding the influence of initial information is crucial in managing cognitive biases and making informed investment decisions.

Here is an exploration of the anchoring bias and an analysis of the primacy effect:

1. Anchoring bias exploration: This bias occurs when we rely too heavily on the first piece of information we receive, and it influences our subsequent decision making. For example, if we’re presented with a high initial price for a stock, we may anchor our valuation around that price, even if it isn’t justified.
2. Primacy effect analysis: The primacy effect refers to our tendency to remember and give more weight to information that we encounter first. When it comes to investing, this means that the initial information we receive about a stock or market can have a significant impact on our perception and subsequent decisions.

Understanding the influence of initial information is crucial in recognizing and managing anchoring bias. By being aware of these biases, we can strive for a more accurate and rational decision-making process.

Now, let’s delve into how these biases can lead to a distorted decision-making process.

Distorted Decision-Making Process

How does anchoring bias impact our decision-making process when it comes to investments?

Anchoring bias is a cognitive bias that affects our ability to make rational decisions. It occurs when we rely too heavily on the first piece of information we receive and use it as a reference point for all subsequent decisions.

In the context of financial planning, this bias can lead us to anchor our investment decisions based on initial information, such as the price of a stock or the performance of a particular asset class. This can result in distorted decision-making, as we may fail to consider other relevant factors or update our beliefs in light of new information.

Understanding and addressing this bias is crucial for making sound investment decisions, as it helps us avoid being overly influenced by irrelevant or outdated information. By being aware of this psychological factor, we can strive for a more objective and rational decision-making process in our investment choices.

Impact on Investment Outcomes

The anchoring bias significantly impacts investment outcomes by distorting decision-making processes. This cognitive bias refers to the tendency to rely too heavily on the first piece of information encountered when making decisions. In the context of investing, anchoring bias can have a profound impact on decision making and biases in financial planning.

Here are four ways in which anchoring bias can affect investment outcomes:

1. Overvaluing initial information: Investors may anchor their decisions based on the initial price they paid for a stock or the first valuation they encountered, leading them to overvalue or undervalue the investment.
2. Ignoring new information: Anchoring bias can cause investors to disregard new information that contradicts their initial anchor, leading to missed opportunities or failure to adjust their investment strategy.
3. Limited diversification: Investors anchored to a specific investment may fail to diversify their portfolio, leading to increased risk and potential losses.
4. Inefficient decision making: Anchoring bias can result in a narrow focus on a single anchor, hindering investors from considering a broader range of factors and making well-informed decisions.

Understanding the impact of anchoring bias on decision making is crucial for investors aiming to overcome biases and achieve better investment outcomes.

Now, let’s delve into another cognitive bias that affects investment decisions – the herding bias.

Herding Bias

We tend to follow the crowd without question, often leading to poor investment decisions due to the influence of herding bias. Herding behavior occurs when investors mimic the actions of others, disregarding their own analysis and instincts. This bias stems from our innate desire to conform and seek safety in numbers.

When faced with uncertainty, we tend to look to others for guidance, assuming that they possess superior knowledge or insight. This behavior can be detrimental to investment outcomes as it often leads to an information cascade, where individuals base their decisions solely on the actions of others, rather than on fundamental analysis or market conditions.

The herding bias can amplify market volatility and contribute to asset bubbles and market crashes. When investors herd together, it creates an imbalance in the market, as prices are driven by sentiment rather than intrinsic value. This can lead to overvaluation or undervaluation of assets, as well as a lack of diversity in portfolios, increasing the risk of losses.

To mitigate the impact of herding bias, it’s crucial to stay informed and rely on objective analysis rather than blindly following the crowd. Diversification, proper risk management, and a long-term perspective can also help reduce the influence of herding behavior on investment decisions. By recognizing and understanding this bias, investors can make more rational choices and achieve better investment outcomes.

Loss Aversion Bias

Loss aversion bias is a cognitive bias that affects our investment choices. It stems from a fear of losing, which leads to a risk-averse mindset.

This bias can influence our decision-making process and result in emotional investment decisions rather than rational ones.

Fear of Losing

Investors often exhibit a strong aversion to potential losses, which can significantly impact their investment decisions. This fear of losing, known as loss aversion bias, is influenced by psychological factors and can lead to irrational behavior. Here are four key points to understand about the fear of losing in investment choices:

1. Risk assessment: Loss aversion bias causes investors to focus more on avoiding losses rather than maximizing gains. This can result in conservative investment decisions and missed opportunities for higher returns.
2. Emotional decision-making: Fear of losing can cloud judgment and lead to impulsive decision-making based on emotions rather than rational analysis. Investors may panic-sell during market downturns, locking in losses instead of riding out the storm.
3. Overestimating losses: Loss aversion bias often causes investors to overestimate the potential losses associated with an investment. This perception of risk can lead to missed investment opportunities and a failure to diversify portfolios effectively.
4. Long-term impact: The fear of losing can hinder long-term investment growth. By being overly cautious, investors may miss out on the compounding effects of time and market growth.

Understanding and managing the fear of losing is crucial for making sound investment choices and maximizing returns.

Risk Aversion Mindset

With a risk aversion mindset, individuals tend to prioritize avoiding losses over maximizing gains when making investment decisions. This cognitive bias, known as loss aversion, can significantly impact the way we assess risk and develop our investment strategy.

To better understand the implications of a risk aversion mindset, let’s take a look at the following table:

Risk Assessment	Investment Strategy
Tendency to focus on potential losses rather than potential gains	Preference for conservative investment options with lower risk
Fear of taking risks that may result in significant losses	Reluctance to invest in high-risk assets, even if they have high potential returns
Desire to protect capital and avoid monetary losses	Emphasis on preserving wealth rather than seeking aggressive growth
Preference for predictable and stable investments	Avoidance of volatile markets and speculative investments

Emotional Investment Decisions

Moving forward from the previous subtopic, let’s delve into how our emotions impact investment decisions through the lens of loss aversion bias. Loss aversion bias is a concept in investor psychology that refers to our tendency to strongly prefer avoiding losses over acquiring gains. This bias can have a significant impact on our investment decisions, as it can lead us to make irrational choices driven by fear and anxiety. Here are four ways in which loss aversion bias affects our emotional investment decisions:

1. Exaggerated fear of losses: We tend to feel the pain of losses more intensely than the pleasure of gains, causing us to be overly cautious and avoid taking necessary risks.
2. Holding onto losing investments: We’ve a tendency to hold onto losing investments for longer periods, hoping to avoid realizing the loss and experiencing the pain associated with it.
3. Overreacting to market downturns: Loss aversion bias can lead us to panic and make hasty decisions during market downturns, such as selling off investments at a loss instead of patiently waiting for the market to recover.
4. Ignoring potential gains: Our fear of losses can cause us to overlook or underestimate potential gains, leading us to miss out on profitable investment opportunities.

Understanding and being aware of our emotional biases, such as loss aversion bias, is crucial in making informed investment decisions. By applying the principles of behavioral finance, we can strive to overcome these biases and make rational choices based on sound analysis and long-term goals.

Gambler’s Fallacy

We often fall into the trap of succumbing to the Gambler’s Fallacy, mistakenly believing that past events affect future outcomes in investment decisions. This cognitive bias can have a significant impact on our risk assessment and probability misconception. The Gambler’s Fallacy occurs when we assume that because a certain outcome has occurred repeatedly in the past, it’s less likely to happen in the future, or vice versa.

In the context of investment decisions, this fallacy can lead to poor choices and misguided expectations. For example, if a stock has been consistently performing well, we may assume that it will continue to do so in the future, disregarding other relevant factors such as market trends, economic conditions, or company fundamentals. On the other hand, if a stock has been consistently performing poorly, we may assume that it’s bound to bounce back, again ignoring important contextual information.

To overcome the Gambler’s Fallacy, it’s crucial to base investment decisions on thorough analysis, research, and sound reasoning. Evaluating the underlying fundamentals of an investment, considering market conditions, and diversifying our portfolio can help mitigate the impact of this bias. By understanding the true probabilities and avoiding the temptation to rely solely on past outcomes, we can make more informed and rational investment choices.

Recency Bias

Recency bias is a cognitive bias that leads investors to give more weight to recent events when making investment decisions. This bias can cause individuals to neglect long-term trends and focus solely on what’s happened recently.

Recent Events Influencing Decisions

As investors, it’s important to recognize how our decisions can be influenced by recent events, due to the cognitive bias known as recency bias. Recent market volatility and global economic uncertainty can have a significant impact on our investment choices. Here are four ways in which recent events can influence our decisions:

1. Emotional reactions: Recent events can trigger strong emotions, leading us to make impulsive investment decisions based on short-term market movements.
2. Anchoring bias: We may anchor our investment decisions to recent events, giving them more weight than they deserve and overlooking long-term trends.
3. Overreaction to news: Recent events can cause us to overreact to news and make hasty investment decisions without fully considering the long-term implications.
4. Herd mentality: Recent events can create a herd mentality, where we follow the crowd and make investment choices based on the actions of others, rather than on careful analysis.

While recent events should be considered, it’s important to avoid neglecting long-term trends in our investment decision-making process. By understanding and being aware of recency bias, we can make more informed and rational investment choices.

Transitioning into the subsequent section about ‘neglecting long-term trends’, it’s crucial to strike a balance between reacting to recent events and considering the bigger picture.

Neglecting Long-Term Trends

Neglecting long-term trends can result in biased investment choices influenced by recency bias. This cognitive bias occurs when individuals give more weight to recent events and experiences, while ignoring historical patterns and long-term trends in the market.

By focusing solely on short-term fluctuations, investors may fail to recognize the underlying forces that drive the market over the long run. This leads to underestimating the potential long-term effects of certain investment decisions.

Ignoring market trends can be detrimental to investment success, as it limits one’s ability to make informed decisions based on a comprehensive understanding of the market.

To overcome recency bias and avoid neglecting long-term trends, investors should take a more holistic approach, considering both recent events and historical data to gain a deeper understanding of market dynamics.

Status Quo Bias

While we acknowledge the influence of cognitive biases on our investment choices, it’s important to recognize the impact of status quo bias. This bias refers to our tendency to prefer the current state of affairs over making changes, even when those changes may lead to better outcomes. In the context of investment decision making, status quo bias can have significant implications.

1. Inertia: Status quo bias can lead to inertia, causing us to stick with our current investments even when there may be better opportunities available. Overcoming status quo bias requires actively seeking out and considering alternative investment options.
2. Missed opportunities: By sticking with the status quo, we may miss out on potential gains from new investments or asset classes that could offer higher returns. Overcoming status quo bias involves regularly reviewing and reassessing our investment portfolio to ensure it aligns with our financial goals.
3. Risk aversion: Status quo bias can make us more risk-averse, as we fear the potential losses associated with making changes. Overcoming status quo bias requires carefully evaluating the risks and rewards of different investment options and making informed decisions based on thorough analysis.
4. Diversification: Status quo bias can prevent us from diversifying our investment portfolio, which increases the risk of loss. Overcoming status quo bias involves actively seeking out and considering diverse investment opportunities to spread risk and potentially enhance returns.

Framing Bias

Let’s explore how framing bias influences our investment decisions. Framing bias is a cognitive bias that occurs when people make decisions based on how information is presented rather than the actual content of the information. In the context of investing, the way information is framed can significantly impact our perception of risk and ultimately affect our investment choices.

Behavioral economics has shown that individuals tend to be more risk-averse when faced with potential losses, and more risk-seeking when presented with potential gains. This bias can lead investors to make suboptimal decisions based on the way investment opportunities are framed.

To illustrate this concept, let’s consider a hypothetical scenario where two investment options are presented:

Investment Option	Frame 1: Gain	Frame 2: Loss
Option A	50% chance of gaining $1000	50% chance of losing $1000
Option B	Guaranteed $500 gain	Guaranteed $500 loss

Now, objectively speaking, both options have the same expected value. However, research has shown that individuals tend to prefer Option A in Frame 1, where there is a chance of gaining $1000, and prefer Option B in Frame 2, where there is a guaranteed gain of $500. This preference is driven by the framing bias and our tendency to perceive risks differently depending on the context.

Understanding framing bias is crucial for investors as it highlights the importance of considering the way information is presented when making investment decisions. By being aware of this bias, investors can strive to make more rational and informed choices that are not influenced solely by the framing of information.

Endowment Effect

Considering the impact of the endowment effect, we tend to overvalue assets that we already possess when making investment decisions. This cognitive bias can have a significant influence on our investment choices, leading us to make irrational decisions based on our attachment to our possessions. Here are four key points to understand about the endowment effect and its implications for investment:

1. Overvaluing possessions: The endowment effect causes us to assign a higher value to the assets we already own compared to their actual worth. This can lead to biased investment decisions, as we may be unwilling to sell these assets at a fair market price.
2. Attachment bias: Our emotional attachment to our possessions contributes to the endowment effect. This bias makes it challenging for us to objectively evaluate the true value of our assets, often leading to suboptimal investment choices.
3. Risk aversion: The endowment effect also makes us more risk-averse when it comes to selling our possessions. We tend to place a higher value on the certainty of keeping our assets rather than taking a risk and potentially gaining more from alternative investments.
4. Diversification challenges: Overvaluing possessions can hinder our ability to diversify our investment portfolio. We may be reluctant to sell our existing assets and allocate funds to other investment opportunities that could potentially yield higher returns.

Understanding the endowment effect is crucial for investors to make rational and informed decisions. By recognizing this bias, we can strive to overcome attachment bias and make investment choices based on objective analysis rather than emotional attachment.

Sunk Cost Fallacy

The Sunk Cost Fallacy influences our investment choices by causing us to make irrational decisions based on the amount of time, money, or effort we have already invested in a particular asset. This cognitive bias leads us to believe that because we have already invested resources into something, we should continue investing in it, even if it no longer makes logical sense. Overcoming sunk costs can be challenging because our emotions and attachment to past investments can cloud our judgment.

The psychological impact of sunk costs can be significant. We often feel a sense of loss when considering abandoning an investment, leading us to hold on to it even when it is no longer profitable. This can result in missed opportunities and financial losses. To overcome this bias, it is crucial to focus on the future potential of an investment rather than dwelling on past investments. Evaluating the current and future prospects objectively is key.

To better understand the impact of the Sunk Cost Fallacy, let’s take a look at the following table:

SITUATION	RATIONAL DECISION
Invested a significant amount of money in a failing stock	Sell the stock and cut losses
Spent years studying a subject that is no longer relevant	Pursue a different field or update skills
Bought a non-refundable ticket for a concert you no longer want to attend	Attend the concert or give the ticket to someone else
Invested time and effort into a failing business venture	Close the business and explore new opportunities

Hindsight Bias

Hindsight Bias can distort our perception of investment choices, leading us to believe that we could have predicted the outcome accurately after the fact. This bias occurs when we view past events as more predictable than they actually were. Here are four key aspects of Hindsight Bias:

1. Regret Avoidance: Hindsight Bias is driven by our desire to avoid regret. When an investment turns out to be successful, we tend to attribute our decision-making skills to the positive outcome. Conversely, if an investment fails, we may blame ourselves for not making a different choice.
2. Self Attribution: Hindsight Bias also stems from our tendency to take credit for positive outcomes and avoid responsibility for negative ones. We tend to believe that we possess more knowledge and foresight than we actually do, leading us to overestimate our abilities to predict future events.
3. Distorted Memory: Our memory of past events can be influenced by Hindsight Bias. We may unconsciously alter our recollection of the circumstances to fit the outcome we now know. This can further reinforce our belief that we could have accurately predicted the outcome.
4. Impact on Decision-making: Hindsight Bias can have a significant impact on our future investment decisions. It can lead us to overestimate our abilities and take on excessive risks based on our distorted perception of past successes. It’s crucial to be aware of this bias and make investment choices based on objective analysis rather than hindsight.

Regret Aversion Bias

Regret aversion bias can influence our investment choices, leading us to avoid taking risks for fear of later regret. This cognitive bias occurs when we prioritize avoiding potential regret over making rational decisions based on expected outcomes. It can have a significant impact on our decision-making process, often causing us to miss out on potentially profitable investment opportunities.

When we’re affected by regret aversion bias, we tend to focus on the negative emotions associated with potential losses rather than the potential gains. We may hesitate to make investments that could lead to regret if they don’t turn out as expected. This bias can lead to a more conservative investment approach, where we prefer safer options with lower potential returns.

To overcome regret aversion bias, it’s important to recognize and acknowledge its influence on our decision-making process. We should strive to make decisions based on a thorough analysis of the potential risks and rewards, rather than solely focusing on avoiding regret. Developing a rational and disciplined investment strategy can help us overcome this bias and make more informed decisions.

Frequently Asked Questions

How Can I Overcome the Overconfidence Bias in My Investment Decisions?

To overcome the overconfidence bias in our investment decisions, we need to employ strategies that help us avoid confirmation bias. By seeking out diverse perspectives, challenging our assumptions, and conducting thorough research, we can make more informed and rational investment choices.

What Are Some Practical Strategies to Avoid Falling Into the Trap of Confirmation Bias When Making Investment Choices?

Practically, we can counter confirmation bias when making investment choices by seeking out diverse perspectives, challenging our own beliefs, and actively seeking contradictory evidence. This helps us make more informed and unbiased decisions.

How Does the Availability Bias Affect My Investment Decisions, and What Steps Can I Take to Mitigate Its Impact?

The availability bias can significantly impact our investment decisions. To mitigate its impact, we can diversify our information sources, conduct thorough research, and seek out alternative perspectives to create a more balanced view.

What Are Some Effective Techniques to Avoid Being Influenced by Anchoring Bias When Evaluating Investment Opportunities?

To avoid being influenced by anchoring bias when evaluating investment opportunities, we can employ various effective techniques. These techniques help us maintain objectivity and make informed decisions based on thorough analysis rather than relying on initial reference points.

Is There a Way to Safeguard Against the Herding Bias and Make Independent Investment Decisions Based on Sound Analysis?

To safeguard against the herding bias and make independent investment decisions based on sound analysis, we can prioritize our own research, diversify our portfolio, and remain disciplined in our investment strategy.

How Can Understanding Cognitive Biases Help Mitigate Investment Risks?

Understanding cognitive biases can help mitigate equity investment risks. By recognizing and addressing our own biases, we can make more rational and informed decisions. For investors, this means avoiding impulsive choices and carefully evaluating opportunities to reduce the impact of cognitive biases on their investments.

Conclusion

In conclusion, understanding and being aware of the various cognitive biases that can impact our investment choices is crucial. By recognizing these biases, we can make more informed and rational decisions.

It’s important not to fall prey to overconfidence, confirmation bias, availability bias, anchoring bias, herding bias, endowment effect, sunk cost fallacy, hindsight bias, or regret aversion bias.

Remember, ‘don’t put all your eggs in one basket’ – diversify your investments to mitigate risk and maximize potential returns.