Investor behavioral biases

Behavioral biases are recurring decision patterns that can cause an investor to act inconsistently with their goal and the information available. They include overconfidence, following the crowd and holding losing positions to avoid acknowledging a loss. This is not a medical diagnosis and does not explain every unsuccessful result.

Examples

If an investor refuses to review an investment solely because they want to wait for the purchase price, the previous price begins to replace analysis of future prospects. Another example is buying a heavily discussed asset without checking whether its risk suits a particular financial goal.

How to review decisions

A behavioral bias cannot be identified solely by whether the price rose or fell after the decision. A rational decision can also produce a loss. For discipline, it helps to record the reasons for a purchase in advance, define review conditions and independently verify information. This process does not guarantee a return, but it helps separate arguments from an emotional desire to justify a past trade. Related reading: [rebalancing and behavior](/guides/rebalancing-and-behavior/), [chart literacy](/guides/chart-literacy/) and [rebalancing](/glossary/rebalansirovka/).

General financial concepts; not an individual recommendation under Russian jurisdiction.

Source reference retained: term-behavior; overconfidence, crowd following, loss avoidance, purchase-price anchoring, discussed assets, financial goals, post-decision price movements, written reasons, review conditions and independent verification caveats preserved.

Investor behavioral biases

Examples

How to review decisions

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