Market Commentary: Banking On It

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Recency bias is a term used in behavioral economics that describes the tendency of people to believe that recent events will occur again soon, that the current state of being will continue indefinitely, that headlines which feel ominous and immediate necessitate urgent action. Lacking the wider-angle lenses of history and mathematical probability, this type of bias affects trading and other short-term decisions that people make — panic selling, bubble buying – fueled by fear or greed in volatile moments.

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