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How did a 22-year-old entrepreneur lose millions in wealth in just 5 years?

**Cognitive biases**: Humans are prone to cognitive biases, such as overconfidence and confirmation bias, which can lead to poor financial decisions.

**Loss aversion**: The pain of losing is psychologically twice as powerful as the pleasure of gaining, making it harder to take calculated risks.

**Emotional investing**: When emotions drive investment decisions, it can lead to impulsive and reckless behavior, causing financial losses.

**Dopamine loops**: The brain's reward system, driven by dopamine, can create addiction-like behaviors around trading and investing, leading to financial losses.

**Framing effects**: The way information is presented influences financial decisions, making people more likely to take risks or be overly cautious.

**Anchoring bias**: Relying too heavily on the first piece of information (anchor) can lead to poor financial decisions, as it skews perspective.

**Sunk cost fallacy**: Throwing good money after bad, due to emotional attachment to a failing investment, can exacerbate financial losses.

**Social proof**: Following the crowd or seeking validation from others can lead to poor financial decisions, as people conform to social norms.

**Self-serving bias**: Attributing successes to personal abilities and failures to external factors leads to an unrealistic view of one's financial abilities.

**False sense of control**: Overestimating control over outcomes can lead to reckless financial decisions, as individuals believe they can control the uncontrollable.

**Confirmation bias**: Only seeking information that supports one's beliefs, while ignoring contradictory evidence, can lead to poor financial decisions.

**Gambler's fallacy**: Believing that a random event (e.g., stock market fluctuations) is due for a reversal, despite no causal relationship, can lead to poor financial decisions.

**Hedonic adaptation**: Humans tend to quickly adapt to new circumstances, including wealth, leading to diminishing returns on happiness and potentially reckless spending.

**Social comparison**: Comparing oneself to others can lead to dissatisfaction and overspending to keep up with peers, exacerbating financial issues.

**Lottery winner's curse**: Sudden wealth can lead to poor financial decisions, as individuals may not be psychologically prepared to manage their newfound wealth.

**Financial literacy**: Lack of basic financial knowledge, such as compound interest and risk management, can lead to poor financial decisions.

**Risk tolerance**: Misjudging one's risk tolerance can lead to over- or under-investing, resulting in financial losses.

**Diversification**: Failing to diversify investments can lead to overexposure to market fluctuations, increasing the risk of significant financial losses.

**Tax implications**: Ignoring tax implications of financial decisions can lead to significant losses, as taxes can erode wealth over time.

**Behavioral finance**: The study of psychological biases in finance can help individuals recognize and avoid common pitfalls, making more informed financial decisions.

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