Investing is a game of numbers but also a game of psychology. Rational thinking is involved in making the right kind of investment decisions, yet there is also a probability of cognitive biases that include mental shortcuts or errors in judgment, leading to irrational behavior, emotional decisions, and costly mistakes that can defeat the very best of investment plans.
We will look at the most common cognitive biases affecting investors, their impact on investment decisions, and how best to counteract them in this article.