Psychology of Investing: What are behavioural biases?

Submitted by nsscadmin on Wed, 04/09/2025 - 09:00

Today we’re launching a large 10-part series on the psychology of investing. Previously in a post during our DIY Investing series we examined a few cognitive biases that can impact your decision-making when DIY investing. In this new series we’ll take a closer look at the biases included in that post as well as several other biases and how they can negatively affect your financial and investing decisions. The full breakdown of our 10-part series will include:

Part 1 – What are behavioural biases?
Part 2 – Herding behaviour
Part 3 – Overconfidence bias
Part 4 – Loss aversion
Part 5 – Anchoring
Part 6 – Confirmation bias
Part 7 – Status quo bias
Part 8 – Present bias
Part 9 – Familiarity bias
Part 10 – Biases and fraud

Before going over several types of behavioural biases in this series we’ll help our readers better understand what exactly behavioural biases are.

Behavioural biases are defined as blind spots in your thought processes that lead you to make suboptimal decisions. These blind spots essentially influence your behaviour without you even realizing it. There are two types of behavioural biases: cognitive and emotional. We’ll be exploring examples of both types in this series.

Cognitive biases are errors in the ways people process information they are given. Two cognitive biases that are included in the series are confirmation bias and present bias.

Emotional biases are when a person lets their feelings influence their behaviour over facts. Two forms of emotional biases that are included in the series are loss aversion and overconfidence bias.

Are biases causing you to make harmful investment decisions without you knowing? Follow along our series to find out.

Failure to file annual financial statements.
Failure to file interim financial statements.
Failure to file an annual or interim management’s discussion and analysis (MD&A) or an annual or interim management report of fund performance (MRFP).
Failure to file an Annual Information Form (AIF).
Failure to file a certification of annual or interim filings required by Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (MI 52-109).
Failure to file required proxy materials or a required information circular.
Failure to file an issuer profile supplement on the System for Electronic Disclosure by Insiders (SEDI).
Failure to file a material change report.
Failure to provide a written update after filing a confidential report of a material change.
Failure to file a business acquisition report.
Failure to file annual oil and gas disclosure prescribed by National Instrument 51-101 Standards of Disclosure of Oil and Gas Activities (NI 51-101) or technical reports for a mineral project required under NI 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).
Failure to file a mandatory news release.
Failure to file corporate governance disclosure as required by national Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101).
Failure to file audit committee disclosure as required by Multilateral Instrument 52-110 Audit Committees (MI 52-110) or BC Instrument 52-509 Audit Committees.
Failure to include disclosure in an issuer’s MD&A relating to disclosure controls and procedures and their direct effectiveness that is referred to in a certificate filed under MI 52-109.
Financial statements of the reporting issuer, or the auditors’ report accompanying the financial statements, do not comply with the requirements of NI 51-102 Continuous Disclosure Obligations (NI 51-102), National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) or National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107).
The reporting issuer has acknowledged that its financial statements, or the auditors’ report accompanying the financial statements, may no longer be relied upon.
The reporting issuer’s AIF, MD&A, MRFP, information circular, or business acquisition reports do not contain information for each of the content items required by NI 51-102 or NI 81-106.
The reporting issuer’s technical disclosure or other reports do not comply with the disclosure requirements of NI 43-101 or 51-101.
Failure to pay a fee required by the Act or the regulations.
Failure to comply with any other requirement related to continuous disclosure.