Imagine that you have spent many weeks analyzing a company, and you have finally bought shares in it. You are convinced it is a gold mine. From that moment, the confirmation bias of the brain kicks in. We humans love being right, and we hate being wrong.
When it comes to pure mental health, the quote above is fantastic. But in the stock market, it can be deadly! If you only focus on the good, you subconsciously start ignoring the warning signs. You only read the positive newspaper articles about your company, and dismiss critics as people who do not understand anything.
In todays society, confirmation bias is bigger than ever, especially on forums and social media. The algorithms understand what you like, and feed you hundreds of posts confirming that your stock is fantastic. This creates a false picture of reality.