Availability Bias: a heuristic (mental shortcut) where the easiest to recall experiences are used to make decisions. This is often the most recent experiences or traumatic events (core memories).
I was searching through the Trader's Blog archives for times we discussed Availability Bias, which is frequently referred to as "recency
Throughout May the fear for many market participants was the US economy was heading into a recession. Last week, stocks and bonds staged an impressive rally with the riskiest of assets rallying the most. The justification from market commentators was interesting.
I used to manage individual stock portfolios......back in the 1990s. I described myself as a Warren Buffett/Peter Lynch style manager. Buy companies you understand with good business models selling products people want at a fair price. This was the philosophy I followed. I felt like I was a
Our brains are programmed to remember more recent or very traumatic events more clearly, which makes us focus on those outcomes rather than other less memorable ones. This cycle actually drives bull and bear markets. Most investors individually follow the same emotional cycle. Since the markets are driven by humans,
The stock market ended up flat for the week, but the week ended on a negative note. On Wednesday we saw a euphoric 3% rally after the Fed raised interest rates. On Thursday and Friday the market took away that rally and then some. The fluctuations in the market this
