“Don’t argue with the market. Never try to prove you’re right and the market is wrong.” – William J. O’Neil, MarketSmith Founder
In the last week’s learning article, we discussed how a rules-based investing system helps an investor to stay clear of biases. Biases can be of two types: cognitive biases, which stem from faulty reasoning, errors in processing information, and memory errors; and emotional biases, which arise from emotions rather than any conscious thought. Between these two types of biases, cognitive biases are easier to correct, through understanding one’s mistakes and learning from them.
