Kahneman believes that two types of thinking exist. The first kind is intuitive, automatic, and direct. The second is conscious, rational, slow, laborious, and logical. Unfortunately, intuitive thinking concludes long before the conscious mind does.
Conjunction Fallacy means – the false belief that a conjunction of two events is more probable than one of the events on its own. – fs.blog
When we have a more detailed situation or more options available then we think that occurrence of it is higher. Compared with a situation that does not have details available.
Investment – When we have a problem then our intuitive brain run for a solution without knowing the problem well but the conscious brain thinks all aspects and makes decisions. As we have seen about system 1 and system 2 if we rely only on system 1 for making an investment decision then it has a higher probability to meet a loss or have to get huge support from luck. When we received any tips or stories about stock from family or relatives then we tend to believe it without thinking further.
Conjunction fallacies continued to occur dominantly when the observed pattern of frequencies resembled conjunction. We should always focus on statistical evidence which helps us to make a rational decision.