Since the emergence of the “Corona” epidemic crisis, some have rushed to buy shares after having to stay at home and take advantage of the market’s decline, including people who invest for the first time in the financial markets, and among several strategies adopted by new investors, their bias towards buying shares of companies familiar to them bearing well-known names and traded in Newspapers and television, as well as stocks of companies that have products they use and love.
In fact, these personal biases towards some companies reduce investment opportunities from hundreds of shares offered in the market to a few companies.
Economist and investment expert Benjamin Graham describes this case and summarizes the danger of personal biases and emotions interfering in investment decisions by saying that individuals who cannot control their emotions are not qualified to benefit from the investment process.
We as people can buy what we like and what we like and are familiar with the products of companies outside the stock market, but in the stock market there is no place for emotions or personal biases. It has resonant names and good products, but it may suffer from crises at the level of the company or at the level of the sector in which it operates, and its share may be trading at a higher value than its real value.
Also, your lack of personal knowledge of the rest of the companies in the stock market does not necessarily mean that they are weak or unsuccessful, but may be outside the scope of your daily interest or that they are not good at the marketing and advertising game well.
As an investor in stocks, it is necessary to ask yourself why you buy this stock?
If your answer is limited to that the company is famous or that it has good products, then you do not have a real reason for making this investment.
The decision to buy a company’s share must result from studying the company, knowing its business and revenues, and evaluating its financial and administrative condition, in addition to the fact that it is trading at less than its real value, as well as studying the sector in which the company operates and its future prospects.
Investing in stocks always requires controlling personal feelings and focusing on research, study and obtaining the necessary information, to make a sound decision, whether to buy or sell based on logical facts related to investment.
And always remember that the biases of some investors to buy the familiar or beloved to them, are the feelings that may lead them towards loss.
Finally, I hope you will benefit from this article
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