Some common investing preferences include oversimplifying things, confirmation bias, information bias, incentive bias and loss-aversion bias. Many factors may trigger a bias. For instance, if you fear losing money, you are less likely to cut your losses even though the stock’s fundamentals have worsened.
Humans are emotional creatures, which separates us from machines and computer programs powered by AI. In investing, having emotions naturally leads to us having certain investing biases.
Unlike us, bots have the “discipline” or “ability” to buy or sell a stock when it hits certain pre-set limits. As emotional beings armed with the capacity to do whatever we want, being able to buy or sell a stock as logically as we can elude us. Despite our best efforts, our biases may be inherent and lead us to make irrational decisions even if the facts are bare.
