Is a subfield of psychology
Focused on how emotions and biases can affect decisions
States that there are errors in decision-making
States that people are NOT rational
Explains why investment bubbles, volatility and drastic movements in the stock market occur
Why Should I Care?
Psychological biases may cause you to make irrational decisions
By knowing these traps, you may be able to avoid them
In order to make the best financial decisions, there has to be rationality involved
Knowing how to overcome these biases can prompt the making of better investing and financial decisions
These are our must-read articles that we HIGHLY recommend will help you develop a strong foundation of behaviorism
Investment Bubbles are created due to over-evaluated prices of an asset, leading to irrational market behavior.
The Recession of 2008 occurred due an investment bubble.
Behavioral Finance is one of the key categories that we offer.
This new field analyzes how psychology affects decisions and subsequently, outcomes.
Mental Accounting involves placing different values on money due to the creation of artificial categories.
When unchecked, it
can lead to harming your long-term goals.
The Fear of Missing Out (FOMO) is something we all experience due to our fears of being regretful.
But why is it so detrimental?
Gambler's Fallacy is the idea that past events somehow influence future events-which are independent.
No matter how many times the coin flips tails, don't count on it giving heads.
Herding occurs when an individual, rather than using their own rational, follows a large group of people under the underlying assumption that others must be right.
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