Rinat Kirdan, CFA. Co-founder and CEO of PRAAMS.Anchoring and adjustment bias. The price at which you bought a stock is irrelevant.Anchoring and adjustment bias is the tendency to interpret new information based on an arbitrary anchor and adjust opinions accordingly. It…Dec 15, 2023Dec 15, 2023
Rinat Kirdan, CFA. Co-founder and CEO of PRAAMS.Conservatism bias. Being stubborn may help in everyday life but not in asset allocation.Conservatism bias is a tendency to stick to prior views or forecasts and to underreact to new information. Investors may cling to outdated…Dec 15, 2023Dec 15, 2023
Rinat Kirdan, CFA. Co-founder and CEO of PRAAMS.Availability bias. Be afraid of coconuts, not sharks.Availability bias is the tendency to consider events more likely if they are easier to recall. It can lead investors to make investment…Dec 14, 2023Dec 14, 2023
Rinat Kirdan, CFA. Co-founder and CEO of PRAAMS.Hindsight bias.Hindsight bias is a cognitive bias whereby people believe they could have predicted an outcome after it occurs. It can lead to excessive…Dec 14, 2023Dec 14, 2023
Rinat Kirdan, CFA. Co-founder and CEO of PRAAMS.Outcome bias. A ‘hot’ trade idea may be just a bubble about to burst.Outcome bias is a cognitive bias where decisions are based on outcomes rather than underlying factors. Investors often make this mistake…Dec 14, 2023Dec 14, 2023
Rinat Kirdan, CFA. Co-founder and CEO of PRAAMS.Framing bias. Your risk appetite is manipulated by how the broker’s questionnaire is worded.Framing bias refers to the tendency to respond differently based on the context or presentation of a situation. It can affect…Nov 9, 2023Nov 9, 2023
Rinat Kirdan, CFA. Co-founder and CEO of PRAAMS.Self-attribution bias.Self-attribution bias leads individuals to attribute success to internal factors and failure to external factors. It can result in…Oct 31, 2023Oct 31, 2023
Rinat Kirdan, CFA. Co-founder and CEO of PRAAMS.Regret aversion bias.Regret aversion bias causes investors to make wrong decisions out of fear of regret. They may hold onto losing positions or avoid selling…Oct 31, 2023Oct 31, 2023
Rinat Kirdan, CFA. Co-founder and CEO of PRAAMS.Representativeness bias.Representativeness bias occurs when new concepts are classified based on existing analogies, leading to incorrect understanding and…Oct 28, 2023Oct 28, 2023
Rinat Kirdan, CFA. Co-founder and CEO of PRAAMS.Self-control bias. A $50,000 SUV will cost you $872,000 without a proper asset allocation strategy.Self-control bias is a lack of short-term discipline for long-term goals. Investors with this bias prioritise immediate satisfaction over…Oct 28, 2023Oct 28, 2023
