Emotional investing refers to making investment decisions based on feelings and emotions rather than rational analysis or objective criteria. This behavior can lead to significant market distortions, as investors may buy or sell assets impulsively based on fear, greed, or anxiety, impacting their overall financial outcomes. Understanding emotional investing helps illuminate the contrasts between decision-making in behavioral finance and traditional finance approaches, where logic and statistical analysis typically prevail.
congrats on reading the definition of Emotional Investing. now let's actually learn it.