This is a summary of the article “3 Mistakes to Avoid When Preparing for the 2024 Election” by Samantha Lamas.

During election years, individuals are particularly susceptible to cognitive biases, driven by the high stakes involved in potential outcomes. Uncertainty dominates, overwhelming rational thought processes. As the 2024 election approaches, it’s crucial to recognize and mitigate several cognitive biases that can distort decision-making.


  • Confirmation bias, for instance, leads us to favor information that confirms our existing beliefs. Despite diligent research efforts, individuals often unwittingly gravitate towards data that reinforces their preconceptions. This bias not only influences our political preferences but also affects how we interpret and accept information, potentially skewing our decision-making process.

Image from: https://impact.economist.com/projects/deliver-change/article/what-is-confirmation-bias-and-how-to-reduce-it/


  • Availability bias similarly impacts decision-making by overemphasizing readily available information. Media coverage that sensationalizes potential market impacts based on election outcomes can mislead investors into believing in significant long-term effects, despite historical evidence suggesting otherwise.

https://www.capitalgroup.com/advisor/insights/ebook-guide-investing-election-year.html


  • Moreover, the scarcity mindset can prompt rushed and suboptimal investment decisions under perceived time pressure. The urgency imposed by election deadlines may lead investors to adopt overly reactive strategies rather than considering long-term implications.

To mitigate these biases, it is recommended to conduct an information audit focusing on balanced, factual sources. Actively seeking diverse viewpoints and avoiding sensationalistic media can help maintain a rational perspective amid election-related pressures. Additionally, implementing structured decision-making rules, such as predefined trading thresholds, can prevent impulsive reactions driven by perceived urgency.

Ultimately, while presidential elections carry significance, maintaining a long-term investment perspective is crucial. By remaining mindful of cognitive biases and adopting disciplined decision-making practices, investors can navigate election cycles with greater clarity and resilience.


Links

Morningstar Article

Further Reading on Confirmation Bias