Tackling cognitive bias in investing

Investing isn’t just about numbers—it’s about navigating the quirks of human psychology. Our brains crave simplicity, but in the complex world of finance, that instinct can lead us astray. Cognitive shortcuts, or biases, often shape decisions in ways that undermine portfolio performance. Two of the most influential biases are framing and anchoring. Framing affects how we interpret information. In investing, it often shows up as home bias—a preference for domestic markets simply because they feel familiar. This overexposure limits diversification and increases vulnerability to local shocks...