Emotional Biases in Investment Decision-Making

Consider the following scenario: Charles is a seasoned investor who has managed his own portfolio for over 20 years. Recently, he has experienced a significant downturn in the technology sector, which he heavily invested in, leading to substantial losses. Despite historical data indicating that the technology sector is cyclical and set for a potential recovery, Charles is now hesitant to invest further in technology stocks. Instead, he expresses a strong affinity for certain stable, income-producing assets that performed well during the downturn, ignoring analysts' forecasts that suggest a rebound in technology.

In your answer, address the emotional biases influencing Charles’s decision-making process. Discuss at least three specific emotional biases and how they apply to his current situation. Additionally, provide recommendations on how these biases can be mitigated to help him make more rational investment decisions going forward.