Investors can't fully remove emotional bias but can put guardrails

A person walks past the TMX Market Centre in Toronto. THE CANADIAN PRESS/Paige Taylor White

Investing your money in the stock market can be more emotional than analytical, especially when the markets are volatile. And at times, it can be hard to keep those emotions in check.

That’s when behavioural biases start driving investment decisions — moves that are purely based on how you’re feeling and your past experiences, rather than focusing on the facts. If not kept in check, experts say biases can be a bigger risk to your portfolio than the market swings.

“Investment isn’t just about numbers and spreadsheets. It’s more emotional and based on experiences and instincts,” said Ryan Gubic, founder of MRG Wealth. “Some of those instincts, while helpful in life, can quietly work against us when it comes to our money and personal finances.”

Biases often come up when an investor starts panicking, leading them to do things like sell when the market drops or chase a stock that’s been performing exceptionally well, he said.

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It could also manifest, for instance, through holding on to a losing investment for too long before admitting the mistake and making a course correction, Gubic said.

“In simple terms, it’s reacting instead of following a plan,” he said.

Brooke Dean said she comes across biases among her clients all the time.

One of the most common ones she sees is the herd mentality, or jumping on the bandwagon, said Dean, a Calgary-based senior wealth manager with BMD Financial Ltd.

She gave a recent example of some investors going to extremes in buying gold as the commodity price surged to never-before-seen highs.

“Once I hear people are buying gold bullion and they’re storing bars in their basement and things like that, that’s usually when it starts to top out,” Dean said.

If you’re hearing about a trend and everybody is already doing it, “it’s probably too late to buy whatever that is,” she added.

An overconfidence bias often jumps out the most among her younger clients, Dean said, which she called one of “the most dangerous” biases among investors.

She said a lot of younger Canadians engage on social media platforms, such as Reddit, scouring for investment advice — and sometimes, it can go well. But there’s no guarantee and it could lead to losses.

Investors usually start taking on more risk after a couple of wins, thinking they’ve figured it out, but they’re eventually humbled by their experiences and losses, Dean said.

She said what they really need is a diversified portfolio rather than just trying to beat the market all the time.

Gubic said when his clients come to him with concerns, it’s important to acknowledge their feelings and get to the root of it.

“The goal really isn’t to eliminate bias, because I’d say that’s not realistic,” he said. “These are our human emotions. We’re going to feel it.”

It’s about “not having the emotions dictate your actions,” he said.

Gubic said a written financial plan can bring structure and help avoid biases.

He said the plan shouldn’t just focus on investments, but offer a holistic view through the main areas of financial life, tying in taxes, retirement, estate, risk and insurance needs alongside investments.

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Ashley Agnew, a behavioural scientist and certified financial therapist at Edward Jones, said a comprehensive financial plan is a “living, breathing tool” that can help block out noise.

“The brain wants a plan, and once your nervous system is at ease, that emotional overwhelm decreases and you can begin to insert logic again,” Agnew said.

Agnew said playing your own devil’s advocate and being curious about your beliefs can also help counter your biases, such as confirmation bias — or a tendency to validate what you already believe.

She said awareness of the bias can sometimes be the intervention you need.

“That’s something that we can all do. We can all have reflective journaling,” Agnew recommended.

This report by The Canadian Press was first published April 14, 2026.

Ritika Dubey, The Canadian Press