Investors often underestimate how psychology influences financial choices. Behavioral biases—such as overconfidence, loss aversion, and herd mentality—can lead to poor timing and unnecessary risk. Recognizing these tendencies helps investors build more disciplined strategies. By relying on data rather than emotion, individuals can avoid common pitfalls like panic‑selling during downturns or chasing overhyped assets. Financial education and structured planning play a major role in reducing bias‑driven mistakes. Understanding your own behavioral patterns is just as important as analyzing market trends.
Source: https://www.cfainstitute.org
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