Emotional Biases Affecting Investment Decisions

Consider a client named John, who recently sold his successful startup and now possesses a substantial amount of capital. Despite having a long-term investment horizon, John is experiencing emotional biases that affect his decision-making. He feels a strong attachment to cash and is hesitant to invest in equities due to recent market volatility.

In your response, discuss how emotional biases, specifically loss aversion and overconfidence, may impact John's investment strategy. Provide specific examples of how these biases can manifest in his decision-making process and suggest strategies that a wealth manager could employ to mitigate these biases.