TRANSCRIPT:

Hi, Greg Vojtanek here of Fade In Financial. Today I’m going to talk about a bias. Now we all have them. I do. You do, and even professional investors have types of a bias.

Now a very popular one would be a Recency Bias, which you see in sports a lot. An athlete breaks a record. The graphic comes up on the screen comparing that athlete with previous professional athletes. Then it’s “which one is the greatest of all time?” Since the most recent one just happened, people think “oh clearly that’s the greatest of all time,” because it just recently happened. That’s a Recency Bias.

Now I’m going to share one that I have as an investor, which is a Hindsight Bias. Basically for me means when I invest in a stock or the overall markets, I’ll look at past performance. In my head, I think I cannot predict the future. Therefore, the best way for me to analyze a stock or the overall markets, is to look at what has happened in the past, or hindsight.

The market may have gone up an average of 10.8% over the last X amount of years. Or a stock has continually gone up every year for the last ten years, therefore I feel a little bit safer investing in that. I know that is a bias. I know that it doesn’t necessarily mean it’s going to continue. But that’s how I look at it and that’s how I feel comfortable.

So we all have a type of bias, even professional investors. I’m sure I’ll share more in the future, in some other videos. But I do hope that you found this helpful.

As always, do what is right for you because your situation is different. Thanks for watching.