Lesson 2 of 3 · 4 min read
Thinking errors (biases)
Your brain takes shortcuts that cost you money.
Confirmation bias
You only look for information that confirms your opinion. Deliberately read counterarguments too before you buy.
Loss aversion
A loss feels about 2× as heavy as an equal gain. Because of this, people hold on to losers too long and sell winners too quickly.
Recency bias
You think the recent trend will continue. But 'it went up' is no reason for it to keep going up.
Remember this
- Confirmation bias: you look for confirmation — deliberately read counterarguments too.
- Loss aversion: a loss feels about 2× as heavy as an equal gain.
- Recency bias: 'it went up' is no reason for it to keep going up.
- You don't spot your own thinking errors automatically — slowing down and checking helps.
There is a quiz for this lesson
2 questions that check whether it stuck. They live in the app, because a quiz nobody grades teaches nothing.
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