Hindsite bias tells you to abandon your plan. Here’s why you shouldn’t.

Nearly 60 years later, many believe that Deca should immediately recognize The Beatles’ talent and predict their future success. This is called “insight bias” – also known as “I-it’s-all-along phenomenon”.2– The tendency to believe that we knew something was going to happen or that we actually predicted it. Hindsite bias exists mainly in terms of investment.3 Whatever the market situation, there is always a message from the media or the investor community that market events, such as extreme declines or increases, were predicted, perhaps even clearer. If you begin to believe that you have missed opportunities or that you are at risk of loss, you may want to give the market time or try to make additional corrections by weighing your portfolio too much in one area. Although we cannot overcome the bias of foresight, we can shift our thinking from “I knew it” to “What can I learn from this?” With a few minor actions:

Understand that regret is a normal feeling

It’s normal to feel nervous during market volatility, but emotions don’t let you abandon your long-term investment strategy. A good investment plan sometimes comes with frustration, especially when the markets work less. Acknowledge what you are feeling and know that others are feeling the same way. The good news is that you probably don’t need to change your current investment approach. A recovery often follows a market downturn. Concentrate on your goals and remember that you made this plan for a reason – your grandchildren’s college education, your first home, or comfortable leisure.

Challenge “Monday morning quarterback”

Much like sports fans who think they have predicted the outcome of a game, some investment pundits refer to market ups and downs as “predictable”. Then there are people who are proud of earning millions by keeping all their funds in one stock because they are I knew It will do well, so that you feel like you missed. It can be frustrating to hear that you weren’t ready for a market event or didn’t take advantage of the opportunity. This “noise” may call into question your decisions, which may lead you to ignore the investment strategies you have been successful with so far. And consider that your friend who has decided to invest heavily in a stock cannot be proud for long if that industry suddenly hits.

Focus on (and believe) what works in the long run

“Noise reduction” requires effort and focus on true investment principles that can help you meet your goals. Get started The purpose of clear investment (Receivable and suitable for your unique situation), add a widely diversified portfolio, be aware of costs and avoid market-time. You cannot control the market, but you can control your investment.

Let a difficult moment pass you by

This is a slight blur on your investment journey. Reflect on where you are and what you have achieved at the moment (saving more, opting for smart taxes or reducing reductions). Smart investing tends to focus on long-term returns and sometimes good decisions can lead to temporary periods of frustration.

Get reassured

When insight enters the bias and you start to strongly distrust your strategy, rely on expertsSelf-managed resources, Industry professional, or Digital or human financial advisor.

Hindsite bias is inevitable, but don’t let it derail you. Remember that famous record company that rejected the Beatles? They were also responsible for many successful works (among them The Rolling Stones and Patsy Klein) and innovative recording technology.4 Like them, you have made good decisions in the past. Believe in those decisions and believe in the plan you have. And remember that the next time the plan says Insight you are wrong.

1,4Paul McGuinness. Decca Records: A History of the Supreme Record Company. 2020

2Ulrich Hofrez and Rodiger Pohl. Research on Hindsite Bias: A Prosperous Past, a Productive Present, and a Challenging Future. 2003.

3Corporate Finance Institute. Enlightenment bias after the incident. 2015.


All investments are at risk, including the potential loss of money you invest.

Diversity does not guarantee gain or protect from loss.

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