คลิกเพื่ออ่านบทความฉบับภาษาไทย
“The investor’s chief problem, and even his worst enemy, is likely to be himself.” — Benjamin Graham
Every investor believes they are rational. Then the numbers prove them wrong. You buy a stock because the analysis made sense. It falls 30%. The original reasons for holding no longer apply, but you hold on anyway because selling would mean admitting you were wrong. Psychology overrides analysis here, and it can happen to every investor.
Behavioral finance studies these patterns: the mental shortcuts and emotional responses that steer decisions away from the facts, often without you noticing. Recognizing them in yourself is the first, and often only, defense against them.
Uncovered Thai Stocks breaks down five biases and how to counter them.
Anchoring bias: Fixating on an old price
Anchoring occurs when a fixed number, such as a purchase price, a past high, or an analyst’s price target, becomes the benchmark for a decision, even after the facts behind that number have changed.
A stock bought at ฿50 now trades at ฿30, with weaker fundamentals than at purchase, yet ฿50 becomes the mental benchmark, and the position is held in the hope of “getting back to even” rather than being judged on where it stands today.
The tell is a running mental comparison to a number the market no longer cares about. Anchoring runs deep: some studies have found that experts or people with stronger analytical skills are less affected by it, while others have shown that even court judges are affected by anchoring when sentencing. If you’re going to anchor to anything, anchor to value, not price. This is one way to deal with it; another is to force yourself to sell or double down; inaction shouldn’t be an option.
Confirmation bias: Filtering out the bad news
Confirmation bias shows up as a habit of seeking out information that supports a view already held while brushing past anything that contradicts it.
An investor convinced a stock will rise pays close attention to bullish coverage but barely registers news about a competitor that could threaten the business. A psychological filter, not the facts, determines which news gets through.
A good practice is to play devil’s advocate with yourself or ask someone else to challenge the idea directly. If neither you nor anyone else has challenged it lately, that’s not proof you’re right. It could be a blind spot.
Recency bias: Assuming the trend continues
Recency bias is the tendency to expect what happened recently to keep happening, treating the most recent data points as if they revealed the whole pattern. The brain is wired so that recent memories are the easiest to recall, which makes them feel more relevant than they actually are.
After two strong years in a row, confident predictions follow that the rally will continue, purely because the last two years did. The same bias runs in reverse, too: after a downturn, investors assume the losses will keep coming and stay on the sidelines even as prices turn cheap.
A useful habit is to check how often last year’s top performer stays on top before assuming a trend will hold. Research by De Bondt and Thaler (1985) found that stocks with the strongest recent returns tend to underperform afterward, while recent losers often go on to outperform.
When making decisions about the future, don’t use yesterday as your only reference point.
Overconfidence bias: The danger of a good run
A string of good results tends to breed overconfidence: overestimating one’s knowledge, skill, or ability to predict what happens next.
Barber and Odean (2000) found that overconfident investors trade more often and hold less-diversified portfolios, leading to worse, not better, performance.
The giveaway usually follows a good run: more trades, bigger positions, less research, all justified by recent success rather than by a sound process. The remedy starts with admitting that overconfidence is possible, then questioning your certainty rather than assuming you already know enough.
It’s hard to stay on top without continuing to adapt, and easy to assume you already have it figured out.
Herding: Safety in numbers, even when they’re wrong
Herding sets in when a stock’s rising popularity replaces independent analysis and buying follows the crowd rather than fundamentals. As John Maynard Keynes put it, “it is better for reputation to fail conventionally than to succeed unconventionally.” It is closely related to FOMO, the fear of missing out, which we’ve covered in more depth in our article “FOMO: The Enemy Within.”
Herding is not inherently wrong. Trends can be profitable to follow, and being a contrarian is not necessarily safer either, since a herd can run in the wrong direction for a long time before it turns.
A stock is everywhere: trending, widely held, and constantly discussed. That visibility alone becomes the reason to buy, without ever forming an independent view of the business’s actual value.
Ask yourself whether this would still interest you if nobody else were talking about it, and whether the decision has its own rationale or only borrows the crowd’s.
Staying grounded
These biases rarely act alone. One feeds another, and together they can turn a small misjudgment into a costly decision. Spotting this is harder with stocks that lack formal analyst coverage, where research and consensus views are limited or absent.
A disciplined, data-led approach will not eliminate bias, but it gives you a firmer basis for reasoning than relying on instinct alone. That is the idea behind FVMR®, our framework for evaluating stocks on Fundamentals, Valuation, Momentum, and Risk. You can read more about it in our article “The A. Stotz Stock Picking Checklist”.
