What Is Recency Bias In Investing?
Recency bias is over-weighting what just happened. It makes investors expect recent trends to
continue, chasing tops and fearing bottoms.
The bias
You assume the recent trend will simply
keep going, up or down.
The reality
Trends reverse and extremes mean-revert.
Recent is not forever.
Extremes on a Fear and Greed Index are exactly where recency misleads most.
Source: CFGI
Markets