Loss-aversion bias is observed often by wealth managers

Loss aversion is one of the behavioral trats of the investors and it is a tendency to avoid losses. Loss aversion is a tendency where the investor is reluctant to accept looses and it is often seen that losses keep piling up but the investor does not close out the position and the book the gain more quickly. When investors open the investment account, an investor having a loss-aversion bias there is a high probability that in the event there are certain stock which have losses and certain stock which have gains, he might not close the position in stocks where there are losses and the losses might become more and he might book the profits in the stocks which are gaining. This is the general tendency of the loss aversion where the investor is finding it hard to accept losses and the losses keeps on piling up. The more appropriate way to handle such situation is once when your stop loss is hit, you should close the position but it is easy to say in theory but sometimes difficult to implement in practice because of the emotion towards avoiding losses.