"The measure of intelligence is the ability to change when necessary" (quote by Einstein), but in everyday life, we often struggle to objectively judge what is happening to us, being immersed in biases without even realizing it. This poses a significant problem when it comes to financial performance, as it can lead to distortions in investors' decisions. Recognizing behavioral biases, especially the most common ones, is not easy. Here are some according to Legal & General Investment Management (LGIM):
In conclusion, no one can avoid all behavioral biases, but if we are more aware of them, we can hope to have a more open mindset.
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