Cheat sheet

Common investing biases, one page

You cannot delete these; they ship with the brain. You can name them, spot the telltale, and build the counter into your process. The eight that cost real money:

Bias	How it shows up	The practical counter
Loss aversion	Losses hurt roughly twice as much as gains feel good, so you sell winners to lock joy and cling to losers to avoid admitting pain.	Judge every holding by one question: would I buy it today? The purchase price is history; the market does not know yours.
Confirmation bias	Once you own it, you read the bull case and scroll past the bear case. Research becomes cheerleading.	Write the bear case before buying (the due-diligence checklist forces this), and reread it, not the bull case, at every results.
Recency bias	Whatever just happened feels permanent: bull markets breed invincibility, crashes breed despair, last year's winner looks like next year's.	Zoom every chart to ten years before deciding anything. The five-year statement view exists for exactly this reason.
Herding	Buying because everyone is buying; the asset that is everywhere is usually already expensive.	Popularity is a valuation input: the more a thing is loved, the more has to go right. Check what you are paying for consensus.
Overconfidence	After three good picks you are a genius; trading frequency rises; returns quietly fall with every extra decision.	Track your XIRR against a global tracker honestly (the spreadsheet does this). The benchmark is humbling, which is its job.
Anchoring	The price you paid, or the recent high, becomes 'true value', and you wait to 'get back to even' on a broken thesis.	The market owes you nothing back. Value is future cash flows, not your entry; if the thesis broke, even is irrelevant.
Sunk cost	Throwing new money after a loser because you are 'already so deep in'. The money spent is gone either way.	Averaging down is only valid when the thesis survived and you would buy fresh today. Otherwise it is doubling a mistake for pride.
Action bias	Volatility makes doing something feel responsible, and every trade feels like control.	Automate the plan so inaction is the default. Most portfolios are hurt more by their owner's activity than by any market.

One meta-counter beats all eight: decisions written down in calm weather (the crash plan, the buy notes, the annual review) outrank decisions made in the moment. Process is how amateurs behave like professionals.

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Educational information, not financial advice. Figures current as of July 2026 where dated; allowances and rates change, so check the source before acting.