In short
- A bias is a mental shortcut that can distort judgement.
- It affects beginners and professionals alike.
- Knowing about it does not always stop it, but it helps you recognise it.
The 7 most cited biases
| Bias | What it is | Example |
|---|---|---|
| Fear of missing out | Wanting in because others are gaining. | A share is rising and everyone is talking about it. |
| Herd behaviour | Doing what the majority does. | Following a WhatsApp group without checking. |
| Loss aversion | A loss hurts more than an equal gain pleases. | Keeping a share only to avoid facing the loss. |
| Confirmation | Remembering what agrees with you. | Reading only positive views on your stock. |
| Anchoring | Getting stuck on a number. | Judging a share only by its purchase price. |
| Overconfidence | Overestimating your ability to predict. | Crediting a gain to talent rather than the market. |
| Recency | Believing the recent past will last. | Thinking a rise will continue because it has lasted. |
The case of IPOs
In a closely followed IPO, several biases can combine: fear of missing out, herd behaviour and recency, after first days of strong gains. This can amplify moves. Sites and groups promising gains also play on these reflexes: see our guide to investment scams.
Why the purchase price misleads
A made-up example: you bought a share at 100 dirhams and it is worth 80 dirhams. The market does not know your purchase price. The price depends on what buyers and sellers think today. The figure of 100 dirhams matters for calculating your gain or loss, but it says nothing about what comes next.
Questions you can ask yourself
These questions do not tell you what to do, but they help spot a bias:
- What verified information is this idea based on?
- Have I looked for opposing views?
- Does this urge come from analysis or from what others are doing?
- What is the source, and does it have something to sell?
Frequently asked questions
Are professionals protected from these biases?
No. Methods and rules can limit them, but nobody escapes them completely.
Where do these ideas come from?
From behavioural finance, which studies how psychology influences financial decisions.
This article is for information and educational purposes only. It is not investment advice or a recommendation to buy or sell any security. Investing in shares involves a risk of capital loss. Check figures against official sources (Casablanca Stock Exchange, AMMC) and consult a licensed professional. Read the full disclaimer.
