The Hot-Hand Fallacy: Avoid Chasing StocksWhy your brain sees patterns in random market moves.

From the show

Smart Personal Finance Strategies

Recognize the cognitive bias that makes us chase 'hot' investments. This tendency, known as the hot-hand fallacy, causes us to see meaningful streaks in what is often just random market noise, leading to the classic mistake of buying high and selling low. Learn how a 1985 basketball study revealed this mental shortcut. Understanding this bias can help you ignore the noise and remember that past performance is not a reliable signal for future results.