UOB-OSK Asset Management Sdn Bhd is running a series of article on The Star Online’s Business Section on investing. Here’s the first of the seven series article.

The first article listed the following shortcomings that is evident in the life of a typical investor:

1) Over Confidence on one’s own ability and knowledge

2) Optimism on factors one cannot control

3) Having biased opinions without actual facts and figures

4) Using false benchmarks or invalid reference points

5) Investing only to profit, where failure is not an option

Influence of psychology on investment decisions…

INVESTING requires the making of decisions under conditions of uncertainty. This means judgment is needed. What influences investment judgment? Investors would like to believe it is a thrilling mixture of skill, knowledge and guts.

Humans are, however, known to suffer from cognitive illusions and emotional weaknesses, and these shortcomings introduce a systematic bias into our judgment.

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