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Overconfidence and Confirmation Bias

Overconfidence, in behavioral finance, causes analysts to overestimate the growth potential of growth companies. As a result, they tend to overemphasize good news and underemphasize bad news related to such firms, possibly in the belief that growth companies must also be good stocks.

The emphasis of news that confirms a pre-existing opinion is also called confirmation bias.

For more information, see all articles on: Uncategorized

See also:
  • Overconfidence Bias
  • Investor Overconfidence and Trading Volume
  • Psychological Traps in Investment Analysis
  • Escalation Bias
  • Data Measurement Errors and Biases
    • Technical Analysis Explained : The Successful Investor's Guide to Spotting Investment Trends and Turning Points

    The Intelligent Investor: The Classic Text on Value Investing

    Financial Statement Analysis: A Practitioner's Guide, 3rd Edition

    Managing Investment Portfolios: A Dynamic Process (CFA Institute Investment Series)

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    The Historical Method for Estimating Value at Risk (VaR) »
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