Course: Behavioral Finance Understanding Your Biases Question: Give an example where you (past investments, past or current thoughts on the market, etc.) or recent article (footnote) exhibited the...

Behavioral Finance and Biases
During my period of excessive trading, I was able to come across a lot of behavioral biases. Following are the instances where it happened.
1. Conservatism - This bias happens when we tend to take the conservative approach during the investment or trading. Even though It was returns sure shot about the downfall of a given stock I kept my volume size really low in order to make sure that I do not encounter losses. Due to this, my profits for a given trade were low which could have been much more.
2. Confirmation bias - This bias happens when we tend to confirm our preconceived notions and find conclusive evidence for the sake of confirmation. We tend to ignore a whole lot of information which should have been looked at before investing. During a recent IPO offer Uber, because of the lot of hype I ended up buying the shares only to realise that valuation was overvalued.
3. Representativeness - This bias happens when you identify one firm or a stock to be representative of all the stocks or the whole portfolio or market. Hence, whatever the first stock or a company comes to your mind, you tend to invest in that rather than analyzing other companies. For example, I wanted to invest in one of the oil and petroleum companies. Since I own a credit card powered by one for the firms, I ended up investing in that firm.
4. Illusion of control - This bias occurs when you own a particular stock or company and you think since you own this, you control in this firm and...