The Recency Bias
One thing we humans specialize in is to take the recent past and project indefinitely into the future. Turns out, this phenomenon has a name. It’s called the Recency Bias – and if you are not aware of this, it can wreak havoc in your (investing) life.
When the stock markets are going up, we believe they will continue to go up (without a break or a downturn). Similarly, when the stock markets are going down, we believe they will continue to keep going down.
Except, this is not how it plays out.
As they say, those who don’t learn from history are doomed to repeat it. And those who learn from the (screaming) headlines are doomed to repeat it too.
Beware of the recency bias. You might well have been infected with it (like I am sometimes).