Confirmation bias is the tendency to seek out, notice, and believe information that supports what you already think, while dismissing or never looking for evidence that would prove you wrong. Psychologist Peter Wason coined the term in the 1960s after showing people testing a rule look mainly for cases that confirm it, rarely ones that break it.
Once you own a stock — or want to — confirmation bias quietly filters your research. You read the bullish threads, follow the analysts who agree with you, and wave away the earnings miss as a one-off. The disconfirming facts (rising debt, a shrinking margin, a better competitor) are the ones that would protect you, and they are exactly the ones the bias hides. It travels with anchoring: once anchored to a view, you hunt for reasons it is right.
Deliberately seek the other side. Before buying, write down the strongest bear case and what specific evidence would tell you the thesis is broken — a concrete invalidation level. If that line is hit, you act rather than rationalize. Following a few credible voices who disagree, and avoiding recency-driven echo chambers, keeps the disconfirming evidence in view.
It is the tendency, studied by psychologist Peter Wason, to seek and believe information that supports what you already think while ignoring evidence that would prove you wrong.
It filters your research toward the bullish takes on a stock you own and waves away red flags like a shrinking margin or a missed quarter — the very facts that would protect you.
Write down the strongest bear case and a concrete invalidation level before buying, and deliberately follow a few credible voices who disagree with you.
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Educational research only — not investment advice.