Knowing ≠ Understanding

An American engineer , Destin Sandlin, who did an experiment with a bicycle . The handle bars are rigged to turn in reverse. If you turn the handles to the right, the front wheel goes left and when you turn the handles to the left, the wheel turns to the right.

Check out the below video to know what happened next 

 

This experiment is a great example of cognitive bias . A human mind is full of biases which affects his decision making process and hence the outcome.

We experienced loss aversion bias during March 20 sell-off where investors dumped the equity to avoid further losses.  Investors then tend to loose the focus of objective or goal for which investment was made and succumb to different biases .

Knowing the equity or for that matter any asset class  & the return patterns by doing all data analysis may not translate into a positive investment outcome .You have to be aware of your own cognitive bias and its potential influence on your behaviour in order to achieve the financial outcome that you desire .

Hence knowing is not equal to understanding & desired outcome .

Keep unlearning and learning !! Happy Investing !!!

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