Why do the supporters of behavioral finance suggest that emotions lead to inferior investment decisions?
According to behavioral finance, behavior of investors is not
always rational, investors show irrational behavior. As human
behavior is not always rational and they make mistakes and act
irrationally, emotions lead to poor investment decisions.
For example, if an investor is emotionally attached to a particular
stock then he/she won't take investment decisions on the stock
using fundamental or financial analysis. Investors emotionally
attached to some particular stocks invest and trade those
particular stocks (without any logic) and often make losses.
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