Table: Irrational Notions
Mental traps that trip up investors
Fixing on price targets, such as "It's a $200 stock," or Dow 36,000. Filtering out any news that undermines the target.
Refusing to sell a losing stock because it means admitting error and giving up hope.
Overestimating ability to pick stocks and understand the market. Minimizing failures and remembering successes.
Following the crowd rather than taking a more analytical view of the market or a stock.
Stereotyping stocks and companies as winners or losers, thereby missing reversals in a company's fortune.
Regarding improbable events as "impossible" and probable events as "certain"--simply misjudging risk.