Are we into bull markets?
In our every day’s lives we have biases in various forms. Biases basically are originated out of our past experiences and its outcomes. Every decision we make is more or less the outcome of our past experiences. These experiences have created a bias in our mind.
These biases are so inherent within us, that we use them intuitively in every walk of life.
Biases actually mean, our perceptions, which lead us take certain decisions in our lives. These decisions are influenced either by people around us or their behaviour or our own psyche.
Few types of biases that we frequently use are as below :
- Confirmation Bias
- Social Proof
- Anchoring Bias
- Self Serving Bias
- Loss aversion Bias
- Framing Bias
There are many more biases that are widely used by all of us, without even knowing that we are victims of these biases.
There are plenty of examples from our day to day lives, where these biases play on our mind and force us to take certain decisions / actions.
- Standing in the longest queue even if the other counter is open with no public
- Looking up to the sky on a busy street, when suddenly everyone around are looking up.
- Picking up a bottle of food, when its content is labelled as 92% fat free and not when it says it contains 8% fat.
- Feeling cheap / ideal price to buy when priced at 999/- and not at 1000/-. ( General tactic used by most of the retailers to increase the sales)
Think it over, don’t we do all these actions without realising that these biases are pushing us to form perceptions and take decisions. Now, does these biases play role in our investment / wealth creation journey?
Watch out for the next series of articles that I am going to write about these biases and how it affects our investment decisions and how can we avoid falling for these biases while making our investment decisions.
Have a pleasant week ahead!!
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