Blinded by Optimism: How Investor Bias Leads to Risky Decisions

Optimism bias causes investors to underestimate risks and overestimate potential gains, leading to poor decisions.

Testing shows investors favor low-quality stocks during bull runs, ignoring risks.

Quality stocks outperform low-quality stocks over the long term, even if short term gains appear bigger.

Educating yourself on investment risks and having a long-term strategy is key to avoid optimism bias.

Seeking outside opinions and weighing pros and cons helps counter optimism bias when making decisions.