INVESTMENT TRAPS- Anchoring Bias
Describes the tendency to only rely on top piece of information and getting anchored to it while decision-making. It causes a lot of oscillation and hinders the decision-making ability.
For instance- You had a good return on a stock in the past, your perception on the future returns would be similar, even when the prices might take a dive.
Escape the Trap by:
1.Acknowledging the bias.
2.In-depth research and analysis.
3.Delaying the decision.
4.Dropping down the anchor.
Describes the tendency to only rely on top piece of information and getting anchored to it while decision-making. It causes a lot of oscillation and hinders the decision-making ability.
For instance- You had a good return on a stock in the past, your perception on the future returns would be similar, even when the prices might take a dive.
Escape the Trap by:
1.Acknowledging the bias.
2.In-depth research and analysis.
3.Delaying the decision.
4.Dropping down the anchor.