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CFA Level 3
Equity Portfolio Management

Tom's Behavioral Bias in Equity Investing

Medium Active Equity Investing Behavioral Considerations

Tom is a portfolio manager with a focus on active equity investing. He has historically been successful in identifying undervalued stocks based on fundamental analysis. However, lately, Tom has noticed a pattern where he has been excessively optimistic about stocks in sectors that have performed well in the recent past, while he has ignored those that have not performed as strongly. This behavior might stem from his emotional attachment to certain sectors.

Considering the influence of behavioral finance on investment decisions, which cognitive bias is Tom most likely exhibiting in this scenario?

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