How Biases Affect Investor Behaviour – Why Investors Aren’t As Risky As They Should Be

The fact is that the majority of people don’t understand the impact that social, political and economic biases have on investor behaviour, read the full report here. What they need to realise is that such biases have a major impact on the kind of trading decisions that are made, whether it’s with regard to investing in the financial markets or any other business venture. And there is a very good reason why this is so.

The basic reason that such biases affect investor behaviour is because the investors that make these decisions don’t have the full knowledge of all of the facts that they should be taking into account. In other words they don’t fully comprehend the potential risks that are involved and they are therefore more inclined to go for whatever the short term returns might promise them rather than investing in companies that might have a better chance of giving them higher returns in the long run.

The next thing that causes such bias in the investor behaviour is because most people don’t like to lose money. The fact is that the majority of people do not like to lose money, and if you look at the history of the financial markets in the past then you will notice that investors are far less concerned about losing money than they used to be. This is because they have become so used to making profits from their investment ventures that they do not want to take losses.

Another major reason why people are less likely to invest in a particular company is because they are more aware of its ability to produce positive results over time. This is due to the fact that the market is becoming increasingly complex, with more information and analysis being required. For example you can easily find out how much a company will cost to buy in the future, the amount that it will need to spend on new equipment or machinery, the overall growth potential of the company and so on.

Of course you can also find out about the performance of the company and the direction in which it is moving. You can also learn about the kind of customer support that the company has in relation to its products or services. You can also get an overview of the company’s operations and learn about their management teams. However, the bottom line is that what they don’t tend to be as interested in knowing about is the risks that are involved with the investments in question.

The last major reason that investors do not take the risk that they should be simply because they are not willing to take that sort of risk. They would rather stick to the safer forms of investing in order to make more modest profits.