Markets
These Five Cognitive Biases Hurt Investors the Most
There is no shortage of cognitive biases out there that can trip up our brains.
By the last count, there are 188 types of these fallible mental shortcuts in existence, and they constantly impede our ability to make the best decisions about our careers, our relationships, and for building wealth over time.
Biases That Plague Investors
In today’s infographic from StocksToTrade, we dive deeper into five of these cognitive biases – specifically the ones that really seem to throw investors and traders for a loop.
Next time you are about to make a major investing decision, make sure you double-check this list!
The moves that may seem instinctual for the average investor may actually be pre-loaded with cognitive biases.
These problems can even plague the most prominent investors in the world – just look at JPMorgan’s Jamie Dimon!
Biases to Avoid
Here are descriptions and examples of the five cognitive biases that can impact investors the most:
Anchoring Bias
The first piece of information you see or hear often ends up being an “anchor” for others that follow.
As an example, if you heard that a new stock was trading at $5.00 – that is the piece of information you may reference whenever thinking about that stock in the future. To avoid this mental mistake: analyze historical data, but don’t hold historical conclusions.
Recency Bias
Recency bias is a tendency to overvalue the latest information available.
If you heard that a CEO is resigning from a company you own shares of, your impulse may be to overvalue this recent news and sell the stock. However, you should be careful, and instead focus on long-term trends and experience to come up with a more measured course of action.
Loss Aversion Bias
No one wants to lose money, but small losses happen all the time even for the best investors – especially on paper.
Loss aversion bias is a tendency to feel the effects of these losses more than wins of equal magnitude, and it can often result in a sub-optimal shift in investing strategy. Investors that are focused only on avoiding losses will miss out on big opportunities for gains.
Confirmation Bias
Taking in information only that confirms your beliefs can be disastrous. It’s tempting, because it is satisfying to see your previous conviction in a positive light – however, it also makes it possible to miss important findings that may help to change your conviction.
Bandwagon Bias
No one wants to get left out, but being the last one to pile onto an opportunity can also be cataclysmic. If you’re going to be a bandwagon jumper, make sure you’re doing it for the right reasons.
Agriculture
Charted: U.S. Egg Prices More Than Double in 2022
This chart shows the increase in the national average price of a dozen Grade A eggs in the U.S. in 2022.

Charted: U.S. Egg Prices Double in 2022
Eggs are a staple food for many countries around the world, and the U.S. is no exception. Americans eat between 250‒280 eggs a year on average.
Eggs are also easy to cook, protein-dense and supply many daily vitamins needed for healthy living, making them a popular meal or ingredient. So when egg prices rise, people notice.
MetalytIQ charted the rapid rise of egg prices in the U.S. during 2022, using data from the U.S. Bureau of Labor and Statistics (BLS).
Eggs-asperating Prices
Over the course of 12 months, the national average price for a dozen large Grade A eggs more than doubled, to $4.25 in December from $1.93 in January.
Egg Prices Per Month (2022) | Price per dozen |
---|---|
January | $1.30 |
February | $2.10 |
March | $2.50 |
April | $2.52 |
May | $2.86 |
June | $2.71 |
July | $2.94 |
August | $3.12 |
September | $2.90 |
October | $3.42 |
November | $3.59 |
December | $4.25 |
The biggest culprit has been an avian flu outbreak that resulted in 43 million chickens culled to prevent the spread of the disease.
This led to a severe shortfall in egg supply. Egg inventories in December had fallen by one-third compared to January. Combined with increasing demand during the holiday season, prices skyrocketed and empty shelves became apparent in some states.
This is not the first time avian flu has disrupted the industry.. In 2015, a similar outbreak pushed egg prices up 40% in nine months, reaching a high of $2.97 per dozen eggs in September 2015.
Will Egg Prices Drop in 2023?
Avian flu isn’t the only storm the egg industry has been facing in 2022.
The prices of soybean and corn—the main components of bird feed—account for half of the cost of eggs. They’ve been heavily affected by the war in Ukraine, which has driven grain prices higher.
In the near-term, egg prices are expected to remain high. Containing the avian flu outbreak will remain the biggest factor in determining the prices, but as suppliers increase production, prices may cool off a little in 2023.
-
Energy2 days ago
Visualizing the Scale of Global Fossil Fuel Production
-
Energy2 weeks ago
Visualizing China’s Dominance in Battery Manufacturing (2022-2027P)
-
Technology1 day ago
Infographic: Generative AI Explained by AI
-
VC+4 weeks ago
Join VC+ for 2023’s Global Forecast Report of Expert Predictions
-
VC+2 weeks ago
Access Our Exclusive Report and Upcoming ‘2023 Global Forecast’ Webinar on VC+
-
Money4 weeks ago
Ranked: The World’s Wealthiest Cities, by Number of Millionaires
-
Markets1 week ago
Charted: The Dipping Cost of Shipping
-
Technology4 weeks ago
Timeline: The Most Important Science Headlines of 2022