Understanding Investor Behavior and Biases

We all use instincts for decision-making and even survival. But gut reactions can hurt your clients' investments. Learn more about these behaviors and biases and why many people are prone to them. More importantly, get tips on how you can help prevent your clients from making costly, emotional decisions.

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Take a closer look at some of the most common investor behaviors. Then put your knowledge into action with our series of worksheets and handouts.

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Anchoring bias is when we put too much weight on an initial piece of information to make a decision. But markets are always changing , and it's important to not stay rooted in the past.


Aversion to loss can cause us to make both rash decisions and prevent us from taking calculated risks. And this can make investors overly conservative or stagnant.


When it comes to investing, overconfidence may contribute to excessive rates of trading in the stock market. And this can lead to unnecessary risks.


This bias makes investors believe they can predict the market's short-term ups and downs. But no one can do this. And it can prevent your clients from making informed decisions.