Investor behaviour

Recency bias

Investors tend to extrapolate recent performance into the future.

What it means for your portfolio

Strong recent returns can signal higher risk ahead, not a guarantee of more of the same.

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Studies (e.g. DALBAR, Morningstar 'Mind the Gap') suggest average investors earn less than the funds they own, by mistiming buys and sells.

Missing a handful of the market's best days sharply reduces long-run returns, and the best days often cluster near the worst.

General information only, not financial advice. Historical figures are approximate and provided for education.