ARSENAL > Confirmation bias

Confirmation bias

Theory
Definition
The tendency to seek out and over-weight information that confirms what you already believe, while dismissing or under-weighting contradictory evidence. The single biggest cognitive trap in investing — leads to ignored sell signals, missed regime changes, and falling-knife trades.

Cure: write down your investment thesis explicitly, list the conditions that would invalidate it, and check those conditions every quarter regardless of price action.
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