Stock Market · True or False
Is it true that recency bias makes investors assume recent trends will continue?
True. Short-term patterns distort long-term thinking.
Recency bias makes recent experience feel like permanent reality — bull markets feel eternal during them and bear markets feel endless during them, leading to mistimed decisions.
Assuming the market will continue doing what it did last year, whether that was rising or falling, when mean reversion is one of the strongest forces in finance.
This scenario is one of 155 in the Skillful Stock Market track. Each card states a situation, you decide true or false, and the explanation follows immediately.
- Answer
- True
- Track
- Stock Market
- Topics
- cognitive-biases, behavioral-finance
Also asked as
What is recency bias in stock investing? Why investors assume recent trends will continue? How recency bias distorts investment expectations?
The scenario in full
Recency bias makes investors assume recent trends will continue.
Frequently asked questions
Is it true that recency bias makes investors assume recent trends will continue?
True. Short-term patterns distort long-term thinking.
What is recency bias in stock investing?
True. Short-term patterns distort long-term thinking. Recency bias makes recent experience feel like permanent reality — bull markets feel eternal during them and bear markets feel endless during them, leading to mistimed decisions.
Why investors assume recent trends will continue?
True. Short-term patterns distort long-term thinking. Recency bias makes recent experience feel like permanent reality — bull markets feel eternal during them and bear markets feel endless during them, leading to mistimed decisions.
How recency bias distorts investment expectations?
True. Short-term patterns distort long-term thinking. Recency bias makes recent experience feel like permanent reality — bull markets feel eternal during them and bear markets feel endless during them, leading to mistimed decisions.
Where does this stock market question come from?
It is one of 155 scenarios in the Skillful Stock Market track. Each card states a realistic situation, you decide true or false, and the explanation follows immediately.
How do I practise more questions like this?
Start the Stock Market quiz. It runs about two minutes per session, the first 150 questions are free across every category, and your progress saves automatically.