4 Methods of Avoiding Investment Bias

We all have read about confirmation bias–the tendency to look for information that confirms a pre-existing belief–and how that bias leads us to make bad investment decisions, such as holding a stock for too long or selling it too soon. And in spite of your expertise and good judgment, we all can succumb to this bias when it comes to investing.

I have come up with four steps to make sure that you don’t succumb when investing.

*Examine all evidence with equal rigor* If you have been sitting on cash during the stock market’s run this year or have been conservative with your investments choices, you may be feeling that you’ve missed out on big returns. And this could lead you to jump into some investments simply because you believe that the market highs will continue (and they have, after all), not because they are the right choice for your portfolio

*Get someone to play devil’s advocate* It has happened to the best of us, no matter our education or background in investing. You are having a conversation in the kitchen at work when you hear someone say, “I just made 100% profit buying ABC stock, and this thing is just taking off.” if you hear a tip from a person you trust and like, chances are you will become convinced that it is, of course, a good idea.

*Be honest with yourself about your motives*. Have you ever heard the saying, “If you can see Fayemi through Fayemi's eyes, you can sell Fayemi what Fayemi buys?” I think it applies to the way I’ve looked at investments in the past–and the motives behind my decisions.

*Don’t ask leading questions.* One of the biggest mistakes you can make as an investor is to ask questions that set you up to get the answer you want–not the answer you need.

Happy Trading,
Ambrose Omordion

PS: All the above cannot be done in isolation, it is only through knowledge acquisition. Hence, it is advisable that you get the  *Comprehensive Stock Trading and investing toolkit for the rest of 2018* by calling 08028164085,08032055467. So that you can prevent the prevailing investment bias.