Anchoring is one. We’re often told to go with the first thing that pops into our minds, whether it’s the answer to a multiple choice test question or a trivial decision about which dessert to pick. It implies your first thought is pure instinct, a ‘blink’ decision (popularised by Malcom Gladwell), derived from subconscious data. Second-guessing yourself supposedly dilutes the magic.
In this article, we will look at a number of psychological traps behind some of the emotions that affect people’s investment decisions. Whether you like to admit it or not, these decisions can have an impact on the growth and performance of your investment portfolio.