inside our brainEmotions are the main cause and driving force in the stock markets.

Last week I shared some thoughts why understanding our mind as a tool that tries to live in an uncertain world is an important challenge.

Because the brain hums away invisibly in the background, we tend to overlook its contribution and take it for granted.  Misunderstanding the working of our own mind does not, thankfully, prevent the mind from doing its work.  Making errors about the inside of our head doesn’t change what’s there.

And that mind of ours tricks us all of the time.

We are biased.


We can never be immune to biases, but the more we know, the safer we will be from self-deception.


Be warned though:

Studying biases can in fact make you more vulnerable to overconfidence and confirmation bias, as you come to see the influence of cognitive biases all around you—in everyone but yourself.  And that bias blind spot, unlike many biases, is especially severe among people like you – who are especially intelligent, thoughtful, and open-minded.


Here it comes: The process of overcoming bias requires 5 steps

(1) first noticing the bias,

(2) analyzing the bias in detail,

(3) deciding that the bias is bad,

(4) figuring out a workaround, and then

(5) implementing it.


For the steps 1) and 2)  Buster Benson from the website “Better Humans” fastidiously categorized those biases into four problem zones:

Information overload

Lack of meaning

The need to act fast

How to know what needs to be remembered for later

Then John Manoogian III put those 188 cognitive biases into a pretty awesome infographic for your viewing pleasure.Map of Biases

That is the easy part.  It’s unfortunate how many people get through steps 1) and 2) and then bog down in step 3), which by right should be the easiest of the five.

Remember biases are lemons, not lemonade, and we shouldn’t try to make lemonade out of them—just burn those lemons down.

And then remember that the heart of Overcoming Bias is to make our stupidity obvious, even to ourselves.

So, with practice and conscious awareness (awareness is the greatest agent for change), you become more alert of these biases, and can prevent them from getting you into too much turmoil.

The other alternative is to choose blindly to remain biased, without any clear idea of the consequences.

This is not second-order rationality.

It is willful stupidity.


Disappointing blog post, right?

Where is that LIFE HACK?  Where is that trick, shortcut, or novelty method that helps me to solve all of my cognitive bias issues right away?

I am afraid there are no easy Hacks for biases.

Ok, maybe then I should change the headline to “Cognitive-Bias-Awareness-Hack”.  But it is too late for that now as I have already written it down.  😉


Humility is the ultimate antidote of biases and the most rational people are those who realize how irrational they can be. – Morgan Housel


  1. I totally agree with you Andy. I am extremely guilty of being impatient. So how am I hacking myself? I simply don’t trade. Instead, I channel all my pumped up energy onto something else, like starting a business, blogging, and reading. That way, I still have an avenue to release my “impatience-ness.” Haha. Are you employing similar strategy?

    • That sounds very familiar indeed. My strategies do look similar in order to overcome the urge to trade. Doing nothing is very often the best advice when it comes to ones investment portfolio (once we have one of course). But it is so counter-intuitive because in all other life situations it is mostly better to do something to avoid danger.
      I guess one of the hardest parts of investing is finding the right balance between:
      • Riding out periods temporarily unfavorable to our views.
      • Realizing our views are wrong and moving on.
      It’s the difference between patience and stubbornness, and can separate the ruined from the rich.

  2. Hi Andy ,
    Yes ! Among the four problem zones , the ” information overload and the need to act fast ” , will make us have ” urgency to trade” which will increase our cost in long run ,,, 🙁
    Cheers !

    • We all have a huge opportunity to gain an edge over most investors through patience and good behavior. Because it’s the difference between patience and stubbornness that can separate the ruined from the financially free.

      I read this brilliant piece on having the power of true patience recently:
      “Be patient” is the best investing advice that no one wants to hear. It’s the equivalent of a doctor telling you to eat your veggies and go for a run. Knowing that it’s right doesn’t make it any easier to accept.

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