September 10, 2014
Recency bias is a major problem for every investor to deal with. What is it? How can you reduce the problem?
Recency bias is a major problem for every investor to deal with. What is it? How can you reduce the problem?
Recency bias is when you look at recent past performance to expect future performance, if you see a stock is going up like crazy, you buy it thinking it will keep going up like crazy indefinitely. Bubbles are when this can really hurt someone, if you buy in to a bubble you can lose big. You can deal with it by buying no load index funds on regular inter voles. This way you are not trying to time the marker and chase performance.