Joy and Patience Smith are 28-year-old twins, who inherited $500,000 3 years ago from a great aunt. Within 6 months after receiving the inheritance they spent over $150,000 to purchase their dream cars and remodel their respective condos. They reasoned that their aunt would want them to enjoy life given their tough financial upbringing after their parents' untimely deaths. But then they realized that maybe they should start investing the remainder because they would probably need to help their elderly grandparents financially. And both of them wanted to start a family soon with their significant other. The sisters put together a portfolio using their own investment strategies. But after taking a big hit last year, they are now considering getting professional help. They approach your firm. In the initial meeting with the sisters you find out the following:

Joy is a high school Social Studies teacher, with a masters degree in history. She considers herself to be very knowledgeable of financial markets. She maintains subscriptions to several financial publications and regularly watches all the business networks. According to her, she has developed a sixth sense about the markets. She encouraged her sister to include mortgage REITs in their portfolio because they pay high dividends, which they will need as their grandparents age. Joy also favors technology stocks, reasoning that you cant go wrong with technology. Recently, however, a couple of the technology stocks she purchased are below the purchase price. But shes determined to hold on to these stocks a little longer, hoping that they will recover. She doesnt want Patience to say, I told you so!

Patience is an RN at the major hospital in town. She suggested that their investment portfolio include Big Pharma and medical device stocks. Based on Joy's strong feeling about REITs, Patience suggested that they also invest in a REIT that owns hospitals. Patience feels that by investing in the medical industry she is helping to support the industry that has helped to supply her livelihood and which does so much good in the world. Besides she knows a lot about the industry and believes in its long-term prospects. Her gut also told her that she should buy some kind of green stock, something related to renewable energy. That would definitely impress her friends, who are all considering buying a Tesla or another type of electric car.

Identify 2 of the emotional biases illustrated in the case study and give the rationale for your choice. (Minimum of 4 sentences for each bias)?