Image Credit: Alex Nabaum
It’s springtime in the year 2030. You’re looking back at the crash of 2020, the devastation it dealt your portfolio and how you behaved as an investor.
What will you say?
If human nature is any guide — and, let’s face it, it is — your accounts of what happened will begin with such words and phrases as “Clearly…” or “It was obvious to me that…” or “Everybody knew that…”
In the future, your memory of the crash of 2020 won’t be a recollection. It will be a reconstruction, built partly from what is happening now and largely from what you learn later about what hasn’t happened yet.
I’m describing hindsight bias — the belief, after something happens, that we foresaw that it would occur.…
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This article was originally published on The Wall Street Journal.
Further reading
Benjamin Graham, The Intelligent Investor
Jason Zweig, The Devil’s Financial Dictionary
Jason Zweig, Your Money and Your Brain
Jason Zweig, The Little Book of Safe Money