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Strategy
Investor Psychology
Your biggest enemy in investing is not the market — it is your own brain. Decades of behavioural finance research have identified systematic cognitive biases that cause investors to consistently make poor decisions.
The Key Biases
Loss Aversion
Losses feel roughly 2x as painful as equivalent gains feel good. This causes investors to hold losing stocks too long (hoping to break even) and sell winners too early (locking in gains).
Confirmation Bias
You seek out information that confirms what you already believe and ignore contradicting evidence. If you love a stock, you will unconsciously dismiss negative news.
FOMO (Fear of Missing Out)
When a stock is surging, the fear of missing the move overrides rational analysis. This is how people buy at the top — they cannot stand watching others profit without them.
Anchoring
Your brain fixes on arbitrary reference points. "This stock was £50 last year, so at £30 it must be cheap." The previous price is irrelevant — only the current intrinsic value matters.
How to Fight Bias
Use systems over feelings. The DipBuster Score exists precisely for this reason — it quantifies multiple objective signals so you do not have to rely on gut feeling. Have written investment rules. Keep a decision journal. And always ask yourself: "Would I buy this stock today at this price if I didn't already own it?"