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Essay from the year 2017 in the subject Business economics - Business Management, Corporate Governance, , language: English, abstract: This essay elaborates on some basic principles and investment strategies that have been proposed to reduce the effects of emotions and biases, and foster rational decision-making. In the first part of this paper, I will summarize some of Weber’s findings on how humans are influenced by emotions and biases when interpreting information and making decisions. The second part will focus on how (i) reducing trading to a minimum, (ii) diversification and (iii) aiming…mehr

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Essay from the year 2017 in the subject Business economics - Business Management, Corporate Governance, , language: English, abstract: This essay elaborates on some basic principles and investment strategies that have been proposed to reduce the effects of emotions and biases, and foster rational decision-making. In the first part of this paper, I will summarize some of Weber’s findings on how humans are influenced by emotions and biases when interpreting information and making decisions. The second part will focus on how (i) reducing trading to a minimum, (ii) diversification and (iii) aiming for the market return can help to control personal biases in investing. Investing money provides great opportunities, but also bears great risks. The market is unforeseeable no matter how much experience you have or how many books you read. Consequently, there is not the one right thing to do in order to be successful. However, there are some guidelines that can reduce your personal risk, help to control personal biases and make our decisions more rational.