You know that feeling you get when you hear of the latest tech IPO? That whisper in your ear that says you know it’s going to be the next big winner. You pass on investing this time, because you were emotionally conflicted and then watch it triple in value, thinking “I knew I should have bought some.”
Instinctively, we know purchasing individual stocks is a risky bet (especially in the short-run) but often our desire to turn our daydreams of winning the lottery in to reality is too overpowering. We secretly look forward to the opportunity to share how smart we are after picking a winner that multiplies exponentially making us wealthy overnight.
This process is known as confirmation bias and can influence our decision making in a manipulative way. After we see a stock increase dramatically that “we had a feeling about,” we promise ourselves, we won’t miss out on the next one. We dive in, without understanding the true risk involved.
Read more at Iris.xyz.