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We can become side-tracked if we are too preoccupied with mental errors.
Some biases are underappreciated but can be lifesavers.
When you are confronted with financial salesmanship, you are able to spot and avoid nonsense. Nonsense can be anything from overconfident projections to accounting gymnastics to fraud.
What is common is a belief that the level of nonsense in a proposition should be proportionate to its marketing zeal. Skepticism, up to the point of cynicism around sales, can be a useful filter that saves you countless headaches.
The enjoyment bias states that an inefficient investing strategy that you enjoy will beat an efficient one that feels like work.
The key to a lot of things in finance is maintaining endurance when there is a downturn. Loving the companies you buy or your strategies is a bias because it doesn't align with cold, rational thinking. But that emotional attachment to your investments keeps you playing during hard times.
This bias is intentionally limiting your diligence to avoid decision paralysis since everything is more complicated if you dig deep enough.
At some point, decisions have to be made, which means you won't know everything and be okay with that.
There are timeless truths that you can learn from history. But some truths can become outdated.
Things change, and you should pay the most attention to your modern world. The recent past is then the most relevant.
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The biggest problem in life isn`t the problem itself, but how people act upon it.
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