{"id":6016,"date":"2023-04-21T11:14:38","date_gmt":"2023-04-21T11:14:38","guid":{"rendered":"https:\/\/goldenpi.com\/blog\/?p=6016"},"modified":"2026-02-26T13:24:38","modified_gmt":"2026-02-26T13:24:38","slug":"the-psychology-of-investors-that-may-be-irrational","status":"publish","type":"post","link":"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/","title":{"rendered":"The Psychology of Investors That May Be Irrational\u00a0"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Action that doesn\u2019t have a logical reason and is unreasonable defines irrationality.\u00a0 But humans when it comes to investing, generally tend to exhibit or execute irrational behaviors than what was sorted out in the head as \u201cRational\u201d. Do you relate to this? Irrationality is beyond your actions as it is influenced by emotion as well as cognitive biases.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Making rational decisions is all that we want while falling into the unpredictive-ness of our psychological ability makes it seem predictable sometimes. The most common irrational behavior so far accounted for is \u201c<\/span><i><span style=\"font-weight: 400;\">Selling an investment after a moment it has lost the money\u201d. <\/span><\/i><span style=\"font-weight: 400;\">Something that we all have done after the roller coaster of emotion that took place in the mind.<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_79_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#The_Rational_Investor_Behaviour\" >The Rational Investor Behaviour\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Coming_Back_to_the_Reality\" >Coming Back to the Reality<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#How_to_Prepare_for_a_Recession_in_India\" >How to Prepare for a Recession in India?<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#The_Usual_Behavioral_Biases\" >The Usual Behavioral Biases\u00a0<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Flashing_News_that_Attracts\" >Flashing News that Attracts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Regretting_the_Investments\" >Regretting the Investments\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#The_act_of_being_overly_Confident\" >The act of being overly Confident\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Not_Acting_on_Things_Timely\" >Not Acting on Things Timely<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Being_a_Comforter\" >Being a Comforter<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Not_Verifying_but_Acting_Right_Away\" >Not Verifying but Acting Right Away<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Being_a_Fortuneteller\" >Being a Fortuneteller<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Triggered_by_Loss_than_Gains\" >Triggered by Loss than Gains\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Mentally_Accustomed_to_Rules\" >Mentally Accustomed to Rules\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Gamblers_Attitude\" >Gambler\u2019s Attitude<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Why_do_you_Pay_Taxes_in_India\" >Why do you Pay Taxes in India?<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Lets_learn_a_bit_from_Warren_Buffet\" >Let\u2019s learn a bit from Warren Buffet<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Whats_in_the_Net_Zero_Ambition_of_India\" >What\u2019s in the Net Zero Ambition of India?<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/goldenpi.com\/blog\/financial-matters\/the-psychology-of-investors-that-may-be-irrational\/#Conclusive_Thoughts\" >Conclusive Thoughts<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"The_Rational_Investor_Behaviour\"><\/span><b>The Rational Investor Behaviour\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">They are the individuals who act in their self-interest. Those who make decisions based on the current data, i.e they are mostly well informed about the events and are convicted consistently. In simple words, \u201cnot following the crowd\u201d. Ideally, they are rational.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But don\u2019t you think it is a far-fetched scenario in the reality? If that were true, things would have been better!<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Coming_Back_to_the_Reality\"><\/span><b>Coming Back to the Reality<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The fact check is that we are humans and emotions come into play when we are making decisions and that influences the investments we make. After all, the investor doesn\u2019t react to the losses and profits symmetrically. And most investors fall into the trap of behavioral biases.<\/span><\/p>\n<h4 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"How_to_Prepare_for_a_Recession_in_India\"><\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/bond-market\/how-to-prepare-for-a-recession-in-india-and-what-to-do-when-one-hits\/?utm_source=blog&amp;utm_medium=blog&amp;utm_Psycology_Investors\"><b>How to Prepare for a Recession in India?<\/b><\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<h2><span class=\"ez-toc-section\" id=\"The_Usual_Behavioral_Biases\"><\/span><b>The Usual Behavioral Biases\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">While it\u2019s true that the behavior of an investor matters a lot while investing, here are the common behavioral biases you might have come across.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Flashing_News_that_Attracts\"><\/span><b><i>Flashing News that Attracts<\/i><\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Let\u2019s say there is flashing news on a particular stock on <a href=\"https:\/\/twitter.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">Twitter<\/a>. That grabs the attention of any normal investor who would invest. That\u2019s called \u201c<\/span><i><span style=\"font-weight: 400;\">Attention Bias\u201d<\/span><\/i><span style=\"font-weight: 400;\">. The negative consequences of the behavioral bias might have been visible to us commonly in instances like holding the losing stock for a longer time and in other ways, selling a winning stock too early.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Continuing to which losing the profits made with aggressive trading activity to cope with the losses can lead a green-looking portfolio to red in no time. Consider that definitely as an opportunity that\u2019s never coming back to you. As it\u2019s lost!<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Regretting_the_Investments\"><\/span><b><i>Regretting the Investments\u00a0<\/i><\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Sometimes cognitive biases can as well be influenced by emotional biases in instances where you are an investor who hasn\u2019t processed the information adequately and hop to make a decision influenced due to an emotional bias such as fear of regret.\u00a0 Fear of regret is one such bias where you are clinging to the mistake to your identity. That mistake reaps no benefit but yet you hold on to it.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"The_act_of_being_overly_Confident\"><\/span><b><i>The act of being overly Confident\u00a0<\/i><\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">An active and pro-investor can as well be a part of the behavioral bias. One such instance can be with \u201cOverconfidence\u201d and \u201cConfirmation\u201d. Let\u2019s say you have a belief and some data validates only your belief though the evidence might show that it isn\u2019t worth investing in. Yet because of the confirmation, they can take an investment decision due to \u201cConfirmation bias\u201d.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While on the other hand, sometimes people think that they know everything and might not know that they don\u2019t know something are more \u201cOverconfident\u201d and can be influenced by \u201cOverconfident Bias\u201d. This might exclude the investors who are experts in the domain as they know their limits essentially to make such a fallacy.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Not_Acting_on_Things_Timely\"><\/span><b><i>Not Acting on Things Timely<\/i><\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Another pitfall can be then when you decide to buy something now and the option is commendable but you hold the purchase just so that you can find it at a better price. Thus missing out on a good opportunity when it actually was the right time to have taken a decision. This phenomenon is known as \u201cGet even it is\u201d.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the financial aspect, it is like when the <a href=\"https:\/\/goldenpi.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">stock purchase<\/a> was bad and yet you do not decide to sell it rather prefer to hold it waiting for break-even, or sometimes expect a trend reversal to take place and miss on the opportunity of selling it at a right time.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Being_a_Comforter\"><\/span><b><i>Being a Comforter<\/i><\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Let\u2019s look into another scenario of \u201cFamiliarity Bias\u201d. In this case, an investor usually tends to stick by the stocks that they are more familiar with than understanding the potential prospect of the stock that they are not familiar with.\u00a0 That\u2019s more like being adjusted to drinking Cold Coffee because you are familiar with the taste rather than trying Smoothie which is a new thing.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Not_Verifying_but_Acting_Right_Away\"><\/span><b><i>Not Verifying but Acting Right Away<\/i><\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Moving ahead, have you come across an instance where you base your decision on the first judgment even though you can do a detailed analysis? Mostly while purchasing a shoe in an e-commerce store that is priced highly and is given at a discount which grabs your attention at a glance than having to check it at different places.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you have to look into this aspect of finance then we all base the price of the stock as a benchmark while purchasing, but when a new stock is priced at the same price, it might look cheap. While in fact, it is not. But rather priced way too high if you analyze.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Being_a_Fortuneteller\"><\/span><b><i>Being a Fortuneteller<\/i><\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Here\u2019s another bias that might look like you are more familiar with. It\u2019s \u201cHindsight Bias\u201d. Funnily our mind is such that when the past predictions might have come true when we had predicted and base our future predictions like we can see the future of the stock ahead. The market can turn around on the flip side of your assumption and end up paying a loss that you didn\u2019t see it coming.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Triggered_by_Loss_than_Gains\"><\/span><b><i>Triggered by Loss than Gains\u00a0<\/i><\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Here\u2019s an interesting fact, \u201cInvestors tend to fear loss so much that they ignore the gains made.\u201d\u00a0 That keeps their eye hooked on the \u201closing stock\u201d consistently leading to selling a stock too early which was a winner and holding the losing stock for too long. That explains the \u201cLoss Aversion\u201d concept.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Mentally_Accustomed_to_Rules\"><\/span><b><i>Mentally Accustomed to Rules\u00a0<\/i><\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">\u201cMental Accounting\u201d is a bias we have been witnessing from parents since childhood. For instance, when you wanted your favorite toy and they denied to purchase saying a Big No. But while you wanted them to buy a book, they got you without a question. Don\u2019t you see the money is spent based on some label?<br \/>\n<\/span><br \/>\n<img decoding=\"async\" src=\"https:\/\/d2zny4996dl67j.cloudfront.net\/blogs\/wp-content\/uploads\/2023\/05\/30102957\/the-psychology-of-investors-that-may-be-irrational-1.gif\" alt=\"The Psychology of Investors That May Be Irrational\" \/><br \/>\n<span style=\"font-weight: 400;\"><br \/>\nIf you think of this to an investor, then it\u2019s more like thinking twice to invest money if it was from a savings account and not thinking even for a second if it was from a gift and waiting recklessly for profits or if it incurs a loss.\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Gamblers_Attitude\"><\/span><b><i>Gambler\u2019s Attitude<\/i><\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Did you know Gamblers think of a series of events as a piece of Good or Bad luck based on the situation? While in reality nothing as such exists. Now think of an investor relying on the same fallacy and taking a move while there is absolutely no trend. It can cost big to them.\u00a0<\/span><\/p>\n<h4 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Why_do_you_Pay_Taxes_in_India\"><\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/why-do-you-pay-taxes\/?utm_source=blog&amp;utm_medium=blog&amp;utm_Psycology_Investors\"><b>Why do you Pay Taxes in India?<\/b><\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<h2><span class=\"ez-toc-section\" id=\"Lets_learn_a_bit_from_Warren_Buffet\"><\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/whats-fascinating-about-warren-buffets-investment-strategy\/\" target=\"_blank\" rel=\"noopener noreferrer\"><b>Let\u2019s learn a bit from Warren Buffet<\/b><\/a><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">He clearly stated that \u201cValuing is not the same as predicting\u201d So then how do you price the stocks? Meaning an investment is done based on the logic that it would return a price that\u2019s higher than what\u2019s invested.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Any investor would usually ask 2 questions before investing:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How much you\u2019ll receive in return after investing?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">And how long will it take to receive those returns?<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">And he exclaims that the \u201cMarket is a voting machine in the short run, while it is a weighing machine in the long run.\u201d Him having said that you must understand the intricacy of the problem at hand here.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The first big thing to know is that finance can answer the question of when will you receive returns depending on 2 things, \u201cInterest Rate\u201d, and \u201cBorrowing Cost\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So here\u2019s a thing you must know, interest rates keep changing. As you know it might rise or fall. When the prices are high the interest rates are low, and vice versa. Warren compared it to a thought of Aesop, \u201cA bird in the hand is worth two in the bush.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If the investor has invested in a stock that is pricey with low-interest rates, which means that they want the expensive birds in the bush in the hand though the returns are lower. But don\u2019t realize they are paying prices that are shockingly high.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Necessarily it is sometimes better to have two birds in the bush itself and sometimes a bird in the hand.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While you are expecting returns from the market that is 10% and more then it is possible in 3 scenarios as he explains:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">When the interest rates fall\u00a0 and are below the historical value\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">When the investors receive a share of the economy and it is above the high historic value.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">When the economy is drastically growing faster.<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Basically, the stock market value reflects how the economy outputs.<\/span><\/p>\n<h4 style=\"text-align: center;\"><span class=\"ez-toc-section\" id=\"Whats_in_the_Net_Zero_Ambition_of_India\"><\/span><a href=\"https:\/\/goldenpi.com\/blog\/essentials\/whats-in-the-net-zero-ambition-of-india\/?utm_source=blog&amp;utm_medium=blog&amp;utm_Psycology_Investors\"><b>What\u2019s in the Net Zero Ambition of India?<\/b><\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<h2><span class=\"ez-toc-section\" id=\"Conclusive_Thoughts\"><\/span><b>Conclusive Thoughts<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">There is always risk in <a href=\"https:\/\/goldenpi.com\/blog\/essentials\/time-value-of-the-money-in-the-present-future\/\" target=\"_blank\" rel=\"noopener noreferrer\">predicting the future<\/a> based on past results. And it becomes quite important for investors to understand that logic is not in the philosophy of believing that it is the next big thing, which is the \u201cHindsight Bias\u201d and at the same time not knowing when to exit.\u00a0 It is neither in blindly investing in one sector like with the \u201cfamiliarity bias\u201d but in being a rational investor where you are logical and reasonable in any investment you do.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While the stock market can put you at the maximum risk and increase your mental stress, the <a href=\"https:\/\/goldenpi.com\/blog\/essentials\/bond-market\/understanding-the-basics-of-the-bond-market\/\" target=\"_blank\" rel=\"noopener noreferrer\">bond market<\/a> is comparatively much more tense-free while you are <a href=\"https:\/\/goldenpi.com\/faq\/bonds-and-ncs\/why-should-i-invest-in-the-fixed-income-market\" target=\"_blank\" rel=\"noopener noreferrer\">gaining a fixed income<\/a> without having to keep an eye on the market.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Action that doesn\u2019t have a logical reason and is unreasonable defines irrationality.\u00a0 But humans when it comes to investing, generally tend to&hellip;<\/p>\n","protected":false},"author":4,"featured_media":12292,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"categories":[151],"tags":[145,146],"class_list":["post-6016","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-matters","tag-investment","tag-investors"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Psychology of Investors That May Be Irrational | Golden Pi<\/title>\n<meta name=\"description\" content=\"Explore the psychology of irrational investors and understand how emotions affect decision-making. 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