Finance glossary
Recency Bias
Definition
Overweighting recent events when predicting the future.
Recency bias leads investors to assume current trends will continue, piling into assets after they have risen and fleeing after they fall. It fuels buying high and selling low. Remembering that markets are cyclical helps counter this powerful tendency.
In a sentence
Recency bias convinced investors the rally would never end, so they bought near the top.
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