Cognitive Biases in Stock Market Decisions

Investors often struggle to make rational choices in the stock market due to various cognitive biases. Despite knowing the simple principle of 'buy low, sell high,' many are swayed by their emotional responses, leading them to buy during market highs and sell during lows. This behavior is compounded by evolutionary psychological tendencies that have influenced human decision-making over millions of years, resulting in deviations from rationality. These biases create a pattern of irrationality that significantly impacts investment outcomes, as people tend to act against their best financial interests.