Have you ever opened WhatsApp to find a piece of news (usually titled: “Must Read”) followed by some paragraph which aligns exactly with your social, political or religious beliefs? Does the message end with “Share with everyone in your contact list”, which is something you inevitably do?
This is an example of confirmation bias – you choosing to accept information which precisely coincides with your existing beliefs. Any evidence of an opposing belief will usually be brushed aside as quickly as it was received. Subconsciously, we tend to let these biases affect our investment decisions, whether we like it or not. Instances such as:
– Looking for positive research reports of a company, after you’ve already bought its shares
– Buying a stock because a friend recommended it, and his tip made you money last time
– Not exiting a stock despite its valuations, as you believe it will continue to rise
– Completely avoiding certain growth sectors, as you’ve had a bad experience with a company in the same sector in the past
The bias is subconscious and hence, involuntary. However, we can try and identify them as they’re happening so that steps can be taken to curb their impact on our decision making.
“The problem with any ideology is that it gives the answer before you look at the evidence. So, you have to mold the evidence to get the answer that you’ve already decided you’ve got to have. It doesn’t work that way” – Bill Clinton
Hence, at KRIIS, we have a team of diversified people, rich in experience in their own respective domains. We blend our disciplined approach with a set of strong values to identify quality, research backed companies, with only one aim in mind – to create and preserve your wealth.
