Subjective Probabilities

Subjective probabilities

Probabilities that are determined subjectively (for example, on the basis of judgment rather than statistical sampling).

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Subjective Probabilities

One's personal judgment about the outcome of a particular investment. At its most extreme, relying on subjective probabilities represents the exact opposite of a formula plan, which seeks to eliminate all personal judgments and biases from investing. By definition, one cannot calculate subjective probabilities because they are based ultimately on one's feeling. Most investors rely on a combination of subjective probabilities and more objective calculations when making investment decisions.