How behavioural biases trip up investors

People often speak about angels or characters on their shoulders representing two opposite behaviours. The "angel and the devil" duo is commonly seen in media; for investors, one angel is "instinctive" and the other is "rational". When it comes to investing, the "instinctive angel" is prone to herd behaviour and fears missing out on potential opportunities, which may lead to ill-judged decisions. It is also more influenced by mood, with fear leading to overspending or cut-price losses, and greed causing the likelihood of success to be overestimated. Unlike the more objective, rational and...